Correlation Between Cairn Homes and MG Credit
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and MG Credit 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 Cairn Homes and MG Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and MG Credit Income, you can compare the effects of market volatilities on Cairn Homes and MG Credit 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 Cairn Homes with a short position of MG Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and MG Credit.
Diversification Opportunities for Cairn Homes and MG Credit
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cairn and MGCI is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and MG Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG Credit Income and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with MG Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Credit Income has no effect on the direction of Cairn Homes i.e., Cairn Homes and MG Credit go up and down completely randomly.
Pair Corralation between Cairn Homes and MG Credit
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.18 times more return on investment than MG Credit. However, Cairn Homes is 1.18 times more volatile than MG Credit Income. It trades about 0.11 of its potential returns per unit of risk. MG Credit Income is currently generating about 0.03 per unit of risk. If you would invest 7,429 in Cairn Homes PLC on October 15, 2024 and sell it today you would earn a total of 11,031 from holding Cairn Homes PLC or generate 148.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cairn Homes PLC vs. MG Credit Income
Performance |
| Timeline |
| Cairn Homes PLC |
| MG Credit Income |
Cairn Homes and MG Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and MG Credit
The main advantage of trading using opposite Cairn Homes and MG Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, MG Credit 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 MG Credit will offset losses from the drop in MG Credit's long position.| Cairn Homes vs. GoldMining | Cairn Homes vs. MTI Wireless Edge | Cairn Homes vs. Centaur Media | Cairn Homes vs. Hochschild Mining plc |
| MG Credit vs. Fidelity National Information | MG Credit vs. Compal Electronics GDR | MG Credit vs. Micron Technology | MG Credit vs. Concurrent Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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