Correlation Between First Steamship and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both First Steamship 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 First Steamship and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Steamship Co and Mercuries Life Insurance, you can compare the effects of market volatilities on First Steamship 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 First Steamship with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Steamship and Mercuries Life.
Diversification Opportunities for First Steamship and Mercuries Life
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Mercuries is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Steamship Co 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 First Steamship 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 First Steamship Co 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 First Steamship i.e., First Steamship and Mercuries Life go up and down completely randomly.
Pair Corralation between First Steamship and Mercuries Life
Assuming the 90 days trading horizon First Steamship Co is expected to generate 1.49 times more return on investment than Mercuries Life. However, First Steamship is 1.49 times more volatile than Mercuries Life Insurance. It trades about 0.05 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about -0.18 per unit of risk. If you would invest 725.00 in First Steamship Co on September 2, 2024 and sell it today you would earn a total of 44.00 from holding First Steamship Co or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Steamship Co vs. Mercuries Life Insurance
Performance |
| Timeline |
| First Steamship |
| Mercuries Life Insurance |
First Steamship and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Steamship and Mercuries Life
The main advantage of trading using opposite First Steamship and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Steamship 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.| First Steamship vs. Sincere Navigation Corp | First Steamship vs. Evergreen International Storage | First Steamship vs. Far Eastern Department | First Steamship vs. Hung Sheng Construction |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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