Correlation Between American Green and MPX International
Can any of the company-specific risk be diversified away by investing in both American Green and MPX 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 American Green and MPX International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Green and MPX International Corp, you can compare the effects of market volatilities on American Green and MPX 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 American Green with a short position of MPX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Green and MPX International.
Diversification Opportunities for American Green and MPX International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and MPX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding American Green and MPX International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPX International Corp and American Green 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 American Green are associated (or correlated) with MPX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPX International Corp has no effect on the direction of American Green i.e., American Green and MPX International go up and down completely randomly.
Pair Corralation between American Green and MPX International
Given the investment horizon of 90 days American Green is expected to generate 6.66 times less return on investment than MPX International. But when comparing it to its historical volatility, American Green is 5.46 times less risky than MPX International. It trades about 0.11 of its potential returns per unit of risk. MPX International Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.20 in MPX International Corp on September 1, 2024 and sell it today you would lose (0.18) from holding MPX International Corp or give up 90.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Green vs. MPX International Corp
Performance |
| Timeline |
| American Green |
| MPX International Corp |
American Green and MPX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Green and MPX International
The main advantage of trading using opposite American Green and MPX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Green position performs unexpectedly, MPX 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 MPX International will offset losses from the drop in MPX International's long position.| American Green vs. Greengro Tech | American Green vs. Growlife | American Green vs. Hemp Inc | American Green vs. Easton Pharmaceutica |
| MPX International vs. North Bud Farms | MPX International vs. CanaQuest Medical Corp | MPX International vs. City View Green | MPX International vs. Benchmark Botanics |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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