Correlation Between Exchange Income and Martinrea International
Can any of the company-specific risk be diversified away by investing in both Exchange Income and Martinrea International 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 Exchange Income and Martinrea International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Income and Martinrea International, you can compare the effects of market volatilities on Exchange Income and Martinrea International 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 Exchange Income with a short position of Martinrea International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and Martinrea International.
Diversification Opportunities for Exchange Income and Martinrea International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Exchange and Martinrea is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International and Exchange Income 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 Exchange Income are associated (or correlated) with Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Exchange Income i.e., Exchange Income and Martinrea International go up and down completely randomly.
Pair Corralation between Exchange Income and Martinrea International
Assuming the 90 days trading horizon Exchange Income is expected to generate 0.62 times more return on investment than Martinrea International. However, Exchange Income is 1.61 times less risky than Martinrea International. It trades about 0.03 of its potential returns per unit of risk. Martinrea International is currently generating about -0.04 per unit of risk. If you would invest 4,589 in Exchange Income on November 19, 2024 and sell it today you would earn a total of 632.00 from holding Exchange Income or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Exchange Income vs. Martinrea International
Performance |
| Timeline |
| Exchange Income |
| Martinrea International |
Exchange Income and Martinrea International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Income and Martinrea International
The main advantage of trading using opposite Exchange Income and Martinrea International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Income position performs unexpectedly, Martinrea International 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 Martinrea International will offset losses from the drop in Martinrea International's long position.| Exchange Income vs. Capital Power | Exchange Income vs. Keyera Corp | Exchange Income vs. Parkland Fuel | Exchange Income vs. TFI International |
| Martinrea International vs. Linamar | Martinrea International vs. Aecon Group | Martinrea International vs. NFI Group | Martinrea International vs. Element Fleet Management |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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