Correlation Between Avon Protection and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both Avon Protection and Mercantile Investment 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 Avon Protection and Mercantile Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avon Protection PLC and The Mercantile Investment, you can compare the effects of market volatilities on Avon Protection and Mercantile Investment 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 Avon Protection with a short position of Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avon Protection and Mercantile Investment.
Diversification Opportunities for Avon Protection and Mercantile Investment
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avon and Mercantile is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Avon Protection PLC and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment and Avon Protection 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 Avon Protection PLC are associated (or correlated) with Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Avon Protection i.e., Avon Protection and Mercantile Investment go up and down completely randomly.
Pair Corralation between Avon Protection and Mercantile Investment
Assuming the 90 days trading horizon Avon Protection PLC is expected to generate 1.78 times more return on investment than Mercantile Investment. However, Avon Protection is 1.78 times more volatile than The Mercantile Investment. It trades about 0.08 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.06 per unit of risk. If you would invest 83,585 in Avon Protection PLC on September 12, 2024 and sell it today you would earn a total of 53,015 from holding Avon Protection PLC or generate 63.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avon Protection PLC vs. The Mercantile Investment
Performance |
| Timeline |
| Avon Protection PLC |
| The Mercantile Investment |
Avon Protection and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avon Protection and Mercantile Investment
The main advantage of trading using opposite Avon Protection and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avon Protection position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| Avon Protection vs. The Mercantile Investment | Avon Protection vs. Summit Materials Cl | Avon Protection vs. New Residential Investment | Avon Protection vs. Taylor Maritime Investments |
| Mercantile Investment vs. Flow Traders NV | Mercantile Investment vs. Fonix Mobile plc | Mercantile Investment vs. Dalata Hotel Group | Mercantile Investment vs. Spirent Communications plc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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