Correlation Between MAHLE Metal and Waste Management
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on MAHLE Metal and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Waste Management.
Diversification Opportunities for MAHLE Metal and Waste Management
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MAHLE and Waste is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Waste Management go up and down completely randomly.
Pair Corralation between MAHLE Metal and Waste Management
Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the Waste Management. But the stock apears to be less risky and, when comparing its historical volatility, MAHLE Metal Leve is 1.08 times less risky than Waste Management. The stock trades about -0.15 of its potential returns per unit of risk. The Waste Management is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 59,590 in Waste Management on August 27, 2024 and sell it today you would earn a total of 6,385 from holding Waste Management or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Waste Management
Performance |
| Timeline |
| MAHLE Metal Leve |
| Waste Management |
MAHLE Metal and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Waste Management
The main advantage of trading using opposite MAHLE Metal and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| MAHLE Metal vs. Baidu Inc | MAHLE Metal vs. Deutsche Bank Aktiengesellschaft | MAHLE Metal vs. HSBC Holdings plc | MAHLE Metal vs. The Bank of |
| Waste Management vs. Fras le SA | Waste Management vs. Western Digital | Waste Management vs. Clave Indices De | Waste Management vs. BTG Pactual Logstica |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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