Correlation Between First Energy and MCF Energy
Can any of the company-specific risk be diversified away by investing in both First Energy and MCF Energy 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 First Energy and MCF Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Energy Metals and MCF Energy, you can compare the effects of market volatilities on First Energy and MCF Energy 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 First Energy with a short position of MCF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Energy and MCF Energy.
Diversification Opportunities for First Energy and MCF Energy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and MCF is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Energy Metals and MCF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCF Energy and First Energy 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 First Energy Metals are associated (or correlated) with MCF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCF Energy has no effect on the direction of First Energy i.e., First Energy and MCF Energy go up and down completely randomly.
Pair Corralation between First Energy and MCF Energy
Assuming the 90 days horizon First Energy Metals is expected to generate 0.78 times more return on investment than MCF Energy. However, First Energy Metals is 1.27 times less risky than MCF Energy. It trades about -0.09 of its potential returns per unit of risk. MCF Energy is currently generating about -0.24 per unit of risk. If you would invest 5.00 in First Energy Metals on September 1, 2024 and sell it today you would lose (1.00) from holding First Energy Metals or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Energy Metals vs. MCF Energy
Performance |
| Timeline |
| First Energy Metals |
| MCF Energy |
First Energy and MCF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Energy and MCF Energy
The main advantage of trading using opposite First Energy and MCF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Energy position performs unexpectedly, MCF Energy 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 MCF Energy will offset losses from the drop in MCF Energy's long position.| First Energy vs. MCF Energy | First Energy vs. Hypercharge Networks Corp | First Energy vs. Traction Uranium Corp | First Energy vs. F3 Uranium Corp |
| MCF Energy vs. Legacy Education | MCF Energy vs. Apple Inc | MCF Energy vs. NVIDIA | MCF Energy vs. Microsoft |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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