Correlation Between United Breweries and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both United Breweries and Mount Gibson 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 United Breweries and Mount Gibson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and Mount Gibson Iron, you can compare the effects of market volatilities on United Breweries and Mount Gibson 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 United Breweries with a short position of Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Mount Gibson.
Diversification Opportunities for United Breweries and Mount Gibson
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Mount is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron and United Breweries 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 United Breweries Co are associated (or correlated) with Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of United Breweries i.e., United Breweries and Mount Gibson go up and down completely randomly.
Pair Corralation between United Breweries and Mount Gibson
Assuming the 90 days trading horizon United Breweries is expected to generate 1.22 times less return on investment than Mount Gibson. But when comparing it to its historical volatility, United Breweries Co is 4.51 times less risky than Mount Gibson. It trades about 0.11 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Mount Gibson Iron on November 4, 2024 and sell it today you would lose (1.00) from holding Mount Gibson Iron or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Mount Gibson Iron
Performance |
| Timeline |
| United Breweries |
| Mount Gibson Iron |
United Breweries and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Mount Gibson
The main advantage of trading using opposite United Breweries and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| United Breweries vs. SENECA FOODS A | United Breweries vs. Suntory Beverage Food | United Breweries vs. Molson Coors Beverage | United Breweries vs. Thai Beverage Public |
| Mount Gibson vs. ArcelorMittal SA | Mount Gibson vs. Steel Dynamics | Mount Gibson vs. Nippon Steel | Mount Gibson vs. NIPPON STEEL SPADR |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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