Correlation Between MGP Ingredients and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both MGP Ingredients and ITALIAN WINE 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 MGP Ingredients and ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGP Ingredients and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on MGP Ingredients and ITALIAN WINE 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 MGP Ingredients with a short position of ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGP Ingredients and ITALIAN WINE.
Diversification Opportunities for MGP Ingredients and ITALIAN WINE
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGP and ITALIAN is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding MGP Ingredients and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS and MGP Ingredients 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 MGP Ingredients are associated (or correlated) with ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of MGP Ingredients i.e., MGP Ingredients and ITALIAN WINE go up and down completely randomly.
Pair Corralation between MGP Ingredients and ITALIAN WINE
Assuming the 90 days trading horizon MGP Ingredients is expected to under-perform the ITALIAN WINE. In addition to that, MGP Ingredients is 1.14 times more volatile than ITALIAN WINE BRANDS. It trades about -0.13 of its total potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about -0.04 per unit of volatility. If you would invest 2,240 in ITALIAN WINE BRANDS on November 4, 2024 and sell it today you would lose (50.00) from holding ITALIAN WINE BRANDS or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
MGP Ingredients vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| MGP Ingredients |
| ITALIAN WINE BRANDS |
MGP Ingredients and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGP Ingredients and ITALIAN WINE
The main advantage of trading using opposite MGP Ingredients and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGP Ingredients position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| MGP Ingredients vs. T MOBILE US | MGP Ingredients vs. Brockhaus Capital Management | MGP Ingredients vs. United Utilities Group | MGP Ingredients vs. RCI Hospitality Holdings |
| ITALIAN WINE vs. ELL ENVIRONHLDGS HD 0001 | ITALIAN WINE vs. MOUNT GIBSON IRON | ITALIAN WINE vs. Nippon Steel | ITALIAN WINE vs. Daido Steel Co |
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.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |