Correlation Between Truxton and Magyar Bancorp

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

By analyzing existing cross correlation between Truxton and Magyar Bancorp, you can compare the effects of market volatilities on Truxton and Magyar Bancorp 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 Truxton with a short position of Magyar Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truxton and Magyar Bancorp.

Diversification Opportunities for Truxton and Magyar Bancorp

0.39

Correlation Coefficient

Truxton  Magyar Bancorp

Weak diversification

The 3 months correlation between Truxton and Magyar is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Truxton and Magyar Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magyar Bancorp and Truxton 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 Truxton are associated (or correlated) with Magyar Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magyar Bancorp has no effect on the direction of Truxton i.e., Truxton and Magyar Bancorp go up and down completely randomly.

Pair Corralation between Truxton and Magyar Bancorp

Given the investment horizon of 90 days Truxton is expected to generate 0.99 times more return on investment than Magyar Bancorp. However, Truxton is 1.01 times less risky than Magyar Bancorp. It trades about 0.03 of its potential returns per unit of risk. Magyar Bancorp is currently generating about -0.01 per unit of risk. If you would invest  7,240  in Truxton on December 21, 2024 and sell it today you would earn a total of  158.00  from holding Truxton or generate 2.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Truxton  vs.  Magyar Bancorp

Truxton

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Truxton are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Truxton is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Magyar Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magyar Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Magyar Bancorp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Truxton and Magyar Bancorp

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

The idea behind Truxton and Magyar 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..