Correlation Between Appen and McGrath RentCorp
Can any of the company-specific risk be diversified away by investing in both Appen and McGrath RentCorp 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 Appen and McGrath RentCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appen Limited and McGrath RentCorp, you can compare the effects of market volatilities on Appen and McGrath RentCorp 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 Appen with a short position of McGrath RentCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and McGrath RentCorp.
Diversification Opportunities for Appen and McGrath RentCorp
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Appen and McGrath is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and McGrath RentCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McGrath RentCorp and Appen 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 Appen Limited are associated (or correlated) with McGrath RentCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McGrath RentCorp has no effect on the direction of Appen i.e., Appen and McGrath RentCorp go up and down completely randomly.
Pair Corralation between Appen and McGrath RentCorp
Assuming the 90 days horizon Appen Limited is expected to generate 8.43 times more return on investment than McGrath RentCorp. However, Appen is 8.43 times more volatile than McGrath RentCorp. It trades about 0.09 of its potential returns per unit of risk. McGrath RentCorp is currently generating about 0.03 per unit of risk. If you would invest 49.00 in Appen Limited on November 7, 2024 and sell it today you would earn a total of 106.00 from holding Appen Limited or generate 216.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.56% |
| Values | Daily Returns |
Appen Limited vs. McGrath RentCorp
Performance |
| Timeline |
| Appen Limited |
| McGrath RentCorp |
Appen and McGrath RentCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appen and McGrath RentCorp
The main advantage of trading using opposite Appen and McGrath RentCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen position performs unexpectedly, McGrath RentCorp 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 McGrath RentCorp will offset losses from the drop in McGrath RentCorp's long position.| Appen vs. Appen Limited | Appen vs. Direct Communication Solutions | Appen vs. Capgemini SE ADR | Appen vs. Quisitive Technology Solutions |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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