Correlation Between BRC and MCF Energy
Can any of the company-specific risk be diversified away by investing in both BRC and MCF Energy 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 BRC and MCF Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC Inc and MCF Energy, you can compare the effects of market volatilities on BRC and MCF Energy 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 BRC with a short position of MCF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and MCF Energy.
Diversification Opportunities for BRC and MCF Energy
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BRC and MCF is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and MCF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCF Energy and BRC 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 BRC Inc are associated (or correlated) with MCF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCF Energy has no effect on the direction of BRC i.e., BRC and MCF Energy go up and down completely randomly.
Pair Corralation between BRC and MCF Energy
Given the investment horizon of 90 days BRC Inc is expected to generate 0.75 times more return on investment than MCF Energy. However, BRC Inc is 1.33 times less risky than MCF Energy. It trades about -0.01 of its potential returns per unit of risk. MCF Energy is currently generating about -0.04 per unit of risk. If you would invest 611.00 in BRC Inc on September 12, 2024 and sell it today you would lose (307.00) from holding BRC Inc or give up 50.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
BRC Inc vs. MCF Energy
Performance |
| Timeline |
| BRC Inc |
| MCF Energy |
BRC and MCF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and MCF Energy
The main advantage of trading using opposite BRC and MCF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, MCF Energy 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 MCF Energy will offset losses from the drop in MCF Energy's long position.The idea behind BRC Inc and MCF Energy 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.| MCF Energy vs. Kaltura | MCF Energy vs. Univest Pennsylvania | MCF Energy vs. CDW Corp | MCF Energy vs. Paltalk |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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