Correlation Between Mast Global and Materials Select
Can any of the company-specific risk be diversified away by investing in both Mast Global and Materials Select 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 Mast Global and Materials Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mast Global Battery and Materials Select Sector, you can compare the effects of market volatilities on Mast Global and Materials Select 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 Mast Global with a short position of Materials Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mast Global and Materials Select.
Diversification Opportunities for Mast Global and Materials Select
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mast and Materials is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mast Global Battery and Materials Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Select Sector and Mast Global 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 Mast Global Battery are associated (or correlated) with Materials Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Select Sector has no effect on the direction of Mast Global i.e., Mast Global and Materials Select go up and down completely randomly.
Pair Corralation between Mast Global and Materials Select
Allowing for the 90-day total investment horizon Mast Global is expected to generate 5.49 times less return on investment than Materials Select. In addition to that, Mast Global is 1.37 times more volatile than Materials Select Sector. It trades about 0.01 of its total potential returns per unit of risk. Materials Select Sector is currently generating about 0.04 per unit of volatility. If you would invest 7,953 in Materials Select Sector on September 3, 2024 and sell it today you would earn a total of 1,525 from holding Materials Select Sector or generate 19.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 48.08% |
| Values | Daily Returns |
Mast Global Battery vs. Materials Select Sector
Performance |
| Timeline |
| Mast Global Battery |
| Materials Select Sector |
Mast Global and Materials Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mast Global and Materials Select
The main advantage of trading using opposite Mast Global and Materials Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mast Global position performs unexpectedly, Materials Select 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 Materials Select will offset losses from the drop in Materials Select's long position.| Mast Global vs. iShares Dividend and | Mast Global vs. Martin Currie Sustainable | Mast Global vs. VictoryShares THB Mid | Mast Global vs. AdvisorShares Gerber Kawasaki |
| Materials Select vs. Vanguard Industrials Index | Materials Select vs. Vanguard Communication Services | Materials Select vs. Vanguard Consumer Discretionary | Materials Select vs. Vanguard Consumer Staples |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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