Correlation Between Black Mountain and Magnum Opus
Can any of the company-specific risk be diversified away by investing in both Black Mountain and Magnum Opus 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 Black Mountain and Magnum Opus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Mountain Acquisition and Magnum Opus Acquisition, you can compare the effects of market volatilities on Black Mountain and Magnum Opus 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 Black Mountain with a short position of Magnum Opus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Mountain and Magnum Opus.
Diversification Opportunities for Black Mountain and Magnum Opus
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and Magnum is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Black Mountain Acquisition and Magnum Opus Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnum Opus Acquisition and Black Mountain 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 Black Mountain Acquisition are associated (or correlated) with Magnum Opus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnum Opus Acquisition has no effect on the direction of Black Mountain i.e., Black Mountain and Magnum Opus go up and down completely randomly.
Pair Corralation between Black Mountain and Magnum Opus
If you would invest 1,049 in Magnum Opus Acquisition on August 26, 2024 and sell it today you would earn a total of 0.00 from holding Magnum Opus Acquisition or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Mountain Acquisition vs. Magnum Opus Acquisition
Performance |
| Timeline |
| Black Mountain Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Magnum Opus Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Black Mountain and Magnum Opus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Mountain and Magnum Opus
The main advantage of trading using opposite Black Mountain and Magnum Opus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Mountain position performs unexpectedly, Magnum Opus 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 Magnum Opus will offset losses from the drop in Magnum Opus' long position.The idea behind Black Mountain Acquisition and Magnum Opus Acquisition 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.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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