Correlation Between US Financial and Marvel Discovery
Can any of the company-specific risk be diversified away by investing in both US Financial and Marvel Discovery 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 US Financial and Marvel Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and Marvel Discovery Corp, you can compare the effects of market volatilities on US Financial and Marvel Discovery 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 US Financial with a short position of Marvel Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Marvel Discovery.
Diversification Opportunities for US Financial and Marvel Discovery
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between FTU-PB and Marvel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Marvel Discovery Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marvel Discovery Corp and US Financial 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 US Financial 15 are associated (or correlated) with Marvel Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marvel Discovery Corp has no effect on the direction of US Financial i.e., US Financial and Marvel Discovery go up and down completely randomly.
Pair Corralation between US Financial and Marvel Discovery
Assuming the 90 days trading horizon US Financial is expected to generate 1.02 times less return on investment than Marvel Discovery. But when comparing it to its historical volatility, US Financial 15 is 7.4 times less risky than Marvel Discovery. It trades about 0.13 of its potential returns per unit of risk. Marvel Discovery Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4.50 in Marvel Discovery Corp on September 14, 2024 and sell it today you would lose (3.00) from holding Marvel Discovery Corp or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Financial 15 vs. Marvel Discovery Corp
Performance |
| Timeline |
| US Financial 15 |
| Marvel Discovery Corp |
US Financial and Marvel Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and Marvel Discovery
The main advantage of trading using opposite US Financial and Marvel Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, Marvel Discovery 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 Marvel Discovery will offset losses from the drop in Marvel Discovery's long position.| US Financial vs. North American Financial | US Financial vs. Prime Dividend Corp | US Financial vs. Canadian Life Companies | US Financial vs. Financial 15 Split |
| Marvel Discovery vs. Lion One Metals | Marvel Discovery vs. Canso Credit Trust | Marvel Discovery vs. US Financial 15 | Marvel Discovery vs. Financial 15 Split |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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