Correlation Between Coty and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Coty and Macmahon Holdings 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 Coty and Macmahon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coty Inc and Macmahon Holdings Limited, you can compare the effects of market volatilities on Coty and Macmahon Holdings 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 Coty with a short position of Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Macmahon Holdings.
Diversification Opportunities for Coty and Macmahon Holdings
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coty and Macmahon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings and Coty 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 Coty Inc are associated (or correlated) with Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Coty i.e., Coty and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Coty and Macmahon Holdings
If you would invest 747.00 in Coty Inc on September 5, 2024 and sell it today you would earn a total of 4.00 from holding Coty Inc or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Coty Inc vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Coty Inc |
| Macmahon Holdings |
Coty and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coty and Macmahon Holdings
The main advantage of trading using opposite Coty and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coty position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.The idea behind Coty Inc and Macmahon Holdings Limited 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.| Macmahon Holdings vs. Analog Devices | Macmahon Holdings vs. ON Semiconductor | Macmahon Holdings vs. Allient | Macmahon Holdings vs. Nextnav Acquisition Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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