Correlation Between Merchants Bancorp and Pioneer Bancorp

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

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

Diversification Opportunities for Merchants Bancorp and Pioneer Bancorp

0.72

Correlation Coefficient

Merchants Bancorp  Pioneer Bancorp

Poor diversification

The 3 months correlation between Merchants and Pioneer is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Merchants Bancorp and Pioneer Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Bancorp and Merchants Bancorp 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 Merchants Bancorp are associated (or correlated) with Pioneer Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Bancorp has no effect on the direction of Merchants Bancorp i.e., Merchants Bancorp and Pioneer Bancorp go up and down completely randomly.

Pair Corralation between Merchants Bancorp and Pioneer Bancorp

Given the investment horizon of 90 days Merchants Bancorp is expected to under-perform the Pioneer Bancorp. In addition to that, Merchants Bancorp is 1.82 times more volatile than Pioneer Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Pioneer Bancorp is currently generating about 0.11 per unit of volatility. If you would invest  1,129  in Pioneer Bancorp on May 6, 2025 and sell it today you would earn a total of  107.00  from holding Pioneer Bancorp or generate 9.48% return on investment over 90 days.

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

Merchants Bancorp  vs.  Pioneer Bancorp

Merchants Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merchants Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Merchants Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pioneer Bancorp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Pioneer Bancorp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Merchants Bancorp and Pioneer Bancorp

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

The idea behind Merchants Bancorp and Pioneer 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.