Correlation Between Henderson Land and Merchants National
Can any of the company-specific risk be diversified away by investing in both Henderson Land and Merchants National 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 Henderson Land and Merchants National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson Land and Merchants National Properties, you can compare the effects of market volatilities on Henderson Land and Merchants National 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 Henderson Land with a short position of Merchants National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson Land and Merchants National.
Diversification Opportunities for Henderson Land and Merchants National
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Henderson and Merchants is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Henderson Land and Merchants National Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merchants National and Henderson Land 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 Henderson Land are associated (or correlated) with Merchants National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merchants National has no effect on the direction of Henderson Land i.e., Henderson Land and Merchants National go up and down completely randomly.
Pair Corralation between Henderson Land and Merchants National
Assuming the 90 days horizon Henderson Land is expected to under-perform the Merchants National. In addition to that, Henderson Land is 2.28 times more volatile than Merchants National Properties. It trades about -0.01 of its total potential returns per unit of risk. Merchants National Properties is currently generating about 0.05 per unit of volatility. If you would invest 140,000 in Merchants National Properties on August 26, 2024 and sell it today you would earn a total of 35,000 from holding Merchants National Properties or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.32% |
| Values | Daily Returns |
Henderson Land vs. Merchants National Properties
Performance |
| Timeline |
| Henderson Land |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Merchants National |
Henderson Land and Merchants National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson Land and Merchants National
The main advantage of trading using opposite Henderson Land and Merchants National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson Land position performs unexpectedly, Merchants National 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 Merchants National will offset losses from the drop in Merchants National's long position.| Henderson Land vs. St Joe Company | Henderson Land vs. Stratus Properties | Henderson Land vs. Mitsui Fudosan Co | Henderson Land vs. New World Development |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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