Correlation Between M3 Mining and MFF Capital
Can any of the company-specific risk be diversified away by investing in both M3 Mining and MFF Capital 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 M3 Mining and MFF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and MFF Capital Investments, you can compare the effects of market volatilities on M3 Mining and MFF Capital 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 M3 Mining with a short position of MFF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and MFF Capital.
Diversification Opportunities for M3 Mining and MFF Capital
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between M3M and MFF is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and M3 Mining 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 M3 Mining are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of M3 Mining i.e., M3 Mining and MFF Capital go up and down completely randomly.
Pair Corralation between M3 Mining and MFF Capital
Assuming the 90 days trading horizon M3 Mining is expected to under-perform the MFF Capital. In addition to that, M3 Mining is 4.92 times more volatile than MFF Capital Investments. It trades about -0.03 of its total potential returns per unit of risk. MFF Capital Investments is currently generating about 0.14 per unit of volatility. If you would invest 244.00 in MFF Capital Investments on August 29, 2024 and sell it today you would earn a total of 180.00 from holding MFF Capital Investments or generate 73.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Mining vs. MFF Capital Investments
Performance |
| Timeline |
| M3 Mining |
| MFF Capital Investments |
M3 Mining and MFF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and MFF Capital
The main advantage of trading using opposite M3 Mining and MFF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining position performs unexpectedly, MFF Capital 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 MFF Capital will offset losses from the drop in MFF Capital's long position.| M3 Mining vs. Group 6 Metals | M3 Mining vs. Aurelia Metals | M3 Mining vs. Microequities Asset Management | M3 Mining vs. DY6 Metals |
| MFF Capital vs. Australian Foundation Investment | MFF Capital vs. GQG Partners DRC | MFF Capital vs. Metrics Master Income | MFF Capital vs. L1 Long Short |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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