Correlation Between Environmental and MFF Capital
Can any of the company-specific risk be diversified away by investing in both Environmental and MFF Capital 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 Environmental and MFF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Environmental Group and MFF Capital Investments, you can compare the effects of market volatilities on Environmental and MFF Capital 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 Environmental with a short position of MFF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental and MFF Capital.
Diversification Opportunities for Environmental and MFF Capital
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Environmental and MFF is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Environmental Group and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and Environmental 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 The Environmental Group are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of Environmental i.e., Environmental and MFF Capital go up and down completely randomly.
Pair Corralation between Environmental and MFF Capital
Assuming the 90 days trading horizon Environmental is expected to generate 1.08 times less return on investment than MFF Capital. In addition to that, Environmental is 3.35 times more volatile than MFF Capital Investments. It trades about 0.04 of its total potential returns per unit of risk. MFF Capital Investments is currently generating about 0.13 per unit of volatility. If you would invest 220.00 in MFF Capital Investments on August 25, 2024 and sell it today you would earn a total of 197.00 from holding MFF Capital Investments or generate 89.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Environmental Group vs. MFF Capital Investments
Performance |
| Timeline |
| The Environmental |
| MFF Capital Investments |
Environmental and MFF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Environmental and MFF Capital
The main advantage of trading using opposite Environmental and MFF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Environmental position performs unexpectedly, MFF Capital 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 MFF Capital will offset losses from the drop in MFF Capital's long position.| Environmental vs. Aneka Tambang Tbk | Environmental vs. Commonwealth Bank of | Environmental vs. ANZ Group Holdings | Environmental vs. Australia and New |
| MFF Capital vs. Clime Investment Management | MFF Capital vs. Pinnacle Investment Management | MFF Capital vs. A1 Investments Resources | MFF Capital vs. M3 Mining |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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