Correlation Between Group 6 and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both Group 6 and Mayfield Childcare 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 Group 6 and Mayfield Childcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 6 Metals and Mayfield Childcare, you can compare the effects of market volatilities on Group 6 and Mayfield Childcare 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 Group 6 with a short position of Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 6 and Mayfield Childcare.
Diversification Opportunities for Group 6 and Mayfield Childcare
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Group and Mayfield is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Group 6 Metals and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare and Group 6 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 Group 6 Metals are associated (or correlated) with Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of Group 6 i.e., Group 6 and Mayfield Childcare go up and down completely randomly.
Pair Corralation between Group 6 and Mayfield Childcare
Assuming the 90 days trading horizon Group 6 Metals is expected to generate 1.73 times more return on investment than Mayfield Childcare. However, Group 6 is 1.73 times more volatile than Mayfield Childcare. It trades about -0.02 of its potential returns per unit of risk. Mayfield Childcare is currently generating about -0.1 per unit of risk. If you would invest 2.80 in Group 6 Metals on August 28, 2024 and sell it today you would lose (0.30) from holding Group 6 Metals or give up 10.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group 6 Metals vs. Mayfield Childcare
Performance |
| Timeline |
| Group 6 Metals |
| Mayfield Childcare |
Group 6 and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 6 and Mayfield Childcare
The main advantage of trading using opposite Group 6 and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 6 position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 vs. Sandfire Resources NL |
| Mayfield Childcare vs. Alternative Investment Trust | Mayfield Childcare vs. Platinum Asset Management | Mayfield Childcare vs. BKI Investment | Mayfield Childcare vs. Carlton Investments |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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