Correlation Between Kip McGrath and Pact Group
Can any of the company-specific risk be diversified away by investing in both Kip McGrath and Pact Group 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 Kip McGrath and Pact Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kip McGrath Education and Pact Group Holdings, you can compare the effects of market volatilities on Kip McGrath and Pact Group 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 Kip McGrath with a short position of Pact Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kip McGrath and Pact Group.
Diversification Opportunities for Kip McGrath and Pact Group
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kip and Pact is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kip McGrath Education and Pact Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pact Group Holdings and Kip McGrath 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 Kip McGrath Education are associated (or correlated) with Pact Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pact Group Holdings has no effect on the direction of Kip McGrath i.e., Kip McGrath and Pact Group go up and down completely randomly.
Pair Corralation between Kip McGrath and Pact Group
Assuming the 90 days trading horizon Kip McGrath is expected to generate 1.43 times less return on investment than Pact Group. In addition to that, Kip McGrath is 1.75 times more volatile than Pact Group Holdings. It trades about 0.01 of its total potential returns per unit of risk. Pact Group Holdings is currently generating about 0.03 per unit of volatility. If you would invest 72.00 in Pact Group Holdings on August 25, 2024 and sell it today you would earn a total of 8.00 from holding Pact Group Holdings or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kip McGrath Education vs. Pact Group Holdings
Performance |
| Timeline |
| Kip McGrath Education |
| Pact Group Holdings |
Kip McGrath and Pact Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kip McGrath and Pact Group
The main advantage of trading using opposite Kip McGrath and Pact Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kip McGrath position performs unexpectedly, Pact Group 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 Pact Group will offset losses from the drop in Pact Group's long position.| Kip McGrath vs. Aneka Tambang Tbk | Kip McGrath vs. BHP Group Limited | Kip McGrath vs. Rio Tinto | Kip McGrath vs. Macquarie Group Ltd |
| Pact Group vs. Kip McGrath Education | Pact Group vs. Viva Leisure | Pact Group vs. Carnegie Clean Energy | Pact Group vs. Lendlease Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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