Correlation Between MAHLE Metal and MercadoLibre
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and MercadoLibre 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 MAHLE Metal and MercadoLibre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and MercadoLibre, you can compare the effects of market volatilities on MAHLE Metal and MercadoLibre 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 MAHLE Metal with a short position of MercadoLibre. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and MercadoLibre.
Diversification Opportunities for MAHLE Metal and MercadoLibre
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between MAHLE and MercadoLibre is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and MercadoLibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre and MAHLE Metal 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 MAHLE Metal Leve are associated (or correlated) with MercadoLibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and MercadoLibre go up and down completely randomly.
Pair Corralation between MAHLE Metal and MercadoLibre
Assuming the 90 days trading horizon MAHLE Metal is expected to generate 1.93 times less return on investment than MercadoLibre. In addition to that, MAHLE Metal is 1.4 times more volatile than MercadoLibre. It trades about 0.03 of its total potential returns per unit of risk. MercadoLibre is currently generating about 0.09 per unit of volatility. If you would invest 3,810 in MercadoLibre on September 14, 2024 and sell it today you would earn a total of 5,565 from holding MercadoLibre or generate 146.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
MAHLE Metal Leve vs. MercadoLibre
Performance |
| Timeline |
| MAHLE Metal Leve |
| MercadoLibre |
MAHLE Metal and MercadoLibre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and MercadoLibre
The main advantage of trading using opposite MAHLE Metal and MercadoLibre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal position performs unexpectedly, MercadoLibre 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 MercadoLibre will offset losses from the drop in MercadoLibre's long position.| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
| MercadoLibre vs. Technos SA | MercadoLibre vs. Palantir Technologies | MercadoLibre vs. Align Technology | MercadoLibre vs. Take Two Interactive Software |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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