Correlation Between Five Star and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Five Star and Metropolitan 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 Five Star and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Star Bancorp and Metropolitan Bank Holding, you can compare the effects of market volatilities on Five Star and Metropolitan 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 Five Star with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Star and Metropolitan Bank.
Diversification Opportunities for Five Star and Metropolitan Bank
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Five and Metropolitan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Five Star Bancorp and Metropolitan Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Holding and Five Star 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 Five Star Bancorp are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Holding has no effect on the direction of Five Star i.e., Five Star and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Five Star and Metropolitan Bank
Given the investment horizon of 90 days Five Star Bancorp is expected to under-perform the Metropolitan Bank. But the stock apears to be less risky and, when comparing its historical volatility, Five Star Bancorp is 2.74 times less risky than Metropolitan Bank. The stock trades about -0.11 of its potential returns per unit of risk. The Metropolitan Bank Holding is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,671 in Metropolitan Bank Holding on January 25, 2024 and sell it today you would earn a total of 598.00 from holding Metropolitan Bank Holding or generate 16.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Star Bancorp vs. Metropolitan Bank Holding
Performance |
| Timeline |
| Five Star Bancorp |
| Metropolitan Bank Holding |
Five Star and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Star and Metropolitan Bank
The main advantage of trading using opposite Five Star and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Star position performs unexpectedly, Metropolitan 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Five Star vs. Community West Bancshares | Five Star vs. HMN Financial | Five Star vs. First Northwest Bancorp | Five Star vs. Cullman Bancorp |
| Metropolitan Bank vs. Customers Bancorp | Metropolitan Bank vs. BayCom Corp | Metropolitan Bank vs. Capital Bancorp | Metropolitan Bank vs. Investar Holding Corp |
Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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