Correlation Between Standard Foods and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Standard Foods and Mercuries Life 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 Standard Foods and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and Mercuries Life Insurance, you can compare the effects of market volatilities on Standard Foods and Mercuries Life 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 Standard Foods with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and Mercuries Life.
Diversification Opportunities for Standard Foods and Mercuries Life
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Standard and Mercuries is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance and Standard Foods 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 Standard Foods Corp are associated (or correlated) with Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Standard Foods i.e., Standard Foods and Mercuries Life go up and down completely randomly.
Pair Corralation between Standard Foods and Mercuries Life
Assuming the 90 days trading horizon Standard Foods is expected to generate 5.46 times less return on investment than Mercuries Life. But when comparing it to its historical volatility, Standard Foods Corp is 2.83 times less risky than Mercuries Life. It trades about 0.26 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 652.00 in Mercuries Life Insurance on November 28, 2024 and sell it today you would earn a total of 80.00 from holding Mercuries Life Insurance or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. Mercuries Life Insurance
Performance |
| Timeline |
| Standard Foods Corp |
| Mercuries Life Insurance |
Standard Foods and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and Mercuries Life
The main advantage of trading using opposite Standard Foods and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life's long position.| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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