Correlation Between Triad Group and MT Bank

Can any of the company-specific risk be diversified away by investing in both Triad Group and MT Bank 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 Triad Group and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Triad Group PLC and MT Bank Corp, you can compare the effects of market volatilities on Triad Group and MT Bank 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 Triad Group with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triad Group and MT Bank.

Diversification Opportunities for Triad Group and MT Bank

0.73

Correlation Coefficient

Triad Group  MT Bank

Poor diversification

The 3 months correlation between Triad and 0JW2 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Triad Group PLC and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and Triad Group 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 Triad Group PLC are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Triad Group i.e., Triad Group and MT Bank go up and down completely randomly.

Pair Corralation between Triad Group and MT Bank

Assuming the 90 days trading horizon Triad Group PLC is expected to under-perform the MT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Triad Group PLC is 1.21 times less risky than MT Bank. The stock trades about -0.1 of its potential returns per unit of risk. The MT Bank Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  19,546  in MT Bank Corp on September 26, 2024 and sell it today you would lose (469.00) from holding MT Bank Corp or give up 2.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.35%
Values	Daily Returns

Triad Group PLC  vs.  MT Bank Corp

Triad Group PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triad Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

MT Bank Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MT Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Triad Group and MT Bank

The main advantage of trading using opposite Triad Group and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triad Group position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.

The idea behind Triad Group PLC and MT Bank Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .