Correlation Between MeVis Medical and CENTRICA ADR
Can any of the company-specific risk be diversified away by investing in both MeVis Medical and CENTRICA ADR 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 MeVis Medical and CENTRICA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MeVis Medical Solutions and CENTRICA ADR NEW, you can compare the effects of market volatilities on MeVis Medical and CENTRICA ADR 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 MeVis Medical with a short position of CENTRICA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and CENTRICA ADR.
Diversification Opportunities for MeVis Medical and CENTRICA ADR
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MeVis and CENTRICA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW and MeVis Medical 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 MeVis Medical Solutions are associated (or correlated) with CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of MeVis Medical i.e., MeVis Medical and CENTRICA ADR go up and down completely randomly.
Pair Corralation between MeVis Medical and CENTRICA ADR
Assuming the 90 days trading horizon MeVis Medical is expected to generate 13.71 times less return on investment than CENTRICA ADR. But when comparing it to its historical volatility, MeVis Medical Solutions is 1.36 times less risky than CENTRICA ADR. It trades about 0.04 of its potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 535.00 in CENTRICA ADR NEW on September 12, 2024 and sell it today you would earn a total of 75.00 from holding CENTRICA ADR NEW or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MeVis Medical Solutions vs. CENTRICA ADR NEW
Performance |
| Timeline |
| MeVis Medical Solutions |
| CENTRICA ADR NEW |
MeVis Medical and CENTRICA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeVis Medical and CENTRICA ADR
The main advantage of trading using opposite MeVis Medical and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeVis Medical position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.| MeVis Medical vs. UNITED UTILITIES GR | MeVis Medical vs. LION ONE METALS | MeVis Medical vs. COMMERCIAL VEHICLE | MeVis Medical vs. GEELY AUTOMOBILE |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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