Correlation Between Savi Financial and Merchants Marine

Can any of the company-specific risk be diversified away by investing in both Savi Financial and Merchants Marine at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Savi Financial and Merchants Marine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Savi Financial and Merchants Marine Bancorp, you can compare the effects of market volatilities on Savi Financial and Merchants Marine and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Savi Financial with a short position of Merchants Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Savi Financial and Merchants Marine.

Diversification Opportunities for Savi Financial and Merchants Marine

-0.72

Correlation Coefficient

Savi Financial  Merchants Marine

Pay attention - limited upside

The 3 months correlation between Savi and Merchants is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Savi Financial and Merchants Marine Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants Marine Bancorp and Savi Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Savi Financial are associated (or correlated) with Merchants Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants Marine Bancorp has no effect on the direction of Savi Financial i.e., Savi Financial and Merchants Marine go up and down completely randomly.

Pair Corralation between Savi Financial and Merchants Marine

Given the investment horizon of 90 days Savi Financial is expected to generate 0.12 times more return on investment than Merchants Marine. However, Savi Financial is 8.08 times less risky than Merchants Marine. It trades about 0.05 of its potential returns per unit of risk. Merchants Marine Bancorp is currently generating about -0.07 per unit of risk. If you would invest  1,506  in Savi Financial on October 26, 2024 and sell it today you would earn a total of  4.00  from holding Savi Financial or generate 0.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Savi Financial  vs.  Merchants Marine Bancorp

Savi Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Savi Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Savi Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Merchants Marine Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merchants Marine Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Savi Financial and Merchants Marine

The main advantage of trading using opposite Savi Financial and Merchants Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Savi Financial position performs unexpectedly, Merchants Marine can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Merchants Marine will offset losses from the drop in Merchants Marine's long position.

The idea behind Savi Financial and Merchants Marine Bancorp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.