Correlation Between Metropolitan Bank and FVCBankcorp
Can any of the company-specific risk be diversified away by investing in both Metropolitan Bank and FVCBankcorp 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 Metropolitan Bank and FVCBankcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Bank Holding and FVCBankcorp, you can compare the effects of market volatilities on Metropolitan Bank and FVCBankcorp 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 Metropolitan Bank with a short position of FVCBankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Bank and FVCBankcorp.
Diversification Opportunities for Metropolitan Bank and FVCBankcorp
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metropolitan and FVCBankcorp is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Bank Holding and FVCBankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FVCBankcorp and Metropolitan Bank 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 Metropolitan Bank Holding are associated (or correlated) with FVCBankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FVCBankcorp has no effect on the direction of Metropolitan Bank i.e., Metropolitan Bank and FVCBankcorp go up and down completely randomly.
Pair Corralation between Metropolitan Bank and FVCBankcorp
Considering the 90-day investment horizon Metropolitan Bank Holding is expected to under-perform the FVCBankcorp. But the stock apears to be less risky and, when comparing its historical volatility, Metropolitan Bank Holding is 1.16 times less risky than FVCBankcorp. The stock trades about -0.23 of its potential returns per unit of risk. The FVCBankcorp is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,195 in FVCBankcorp on January 20, 2024 and sell it today you would lose (135.00) from holding FVCBankcorp or give up 11.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Bank Holding vs. FVCBankcorp
Performance |
| Timeline |
| Metropolitan Bank Holding |
| FVCBankcorp |
Metropolitan Bank and FVCBankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Bank and FVCBankcorp
The main advantage of trading using opposite Metropolitan Bank and FVCBankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Bank position performs unexpectedly, FVCBankcorp 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 FVCBankcorp will offset losses from the drop in FVCBankcorp's long position.The idea behind Metropolitan Bank Holding and FVCBankcorp 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |