Correlation Between MA Financial and Home Consortium
Can any of the company-specific risk be diversified away by investing in both MA Financial and Home Consortium 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 MA Financial and Home Consortium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MA Financial Group and Home Consortium, you can compare the effects of market volatilities on MA Financial and Home Consortium 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 MA Financial with a short position of Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of MA Financial and Home Consortium.
Diversification Opportunities for MA Financial and Home Consortium
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MAF and Home is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MA Financial Group and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium and MA Financial 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 MA Financial Group are associated (or correlated) with Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of MA Financial i.e., MA Financial and Home Consortium go up and down completely randomly.
Pair Corralation between MA Financial and Home Consortium
Assuming the 90 days trading horizon MA Financial is expected to generate 18.42 times less return on investment than Home Consortium. In addition to that, MA Financial is 1.46 times more volatile than Home Consortium. It trades about 0.02 of its total potential returns per unit of risk. Home Consortium is currently generating about 0.62 per unit of volatility. If you would invest 1,013 in Home Consortium on August 29, 2024 and sell it today you would earn a total of 214.00 from holding Home Consortium or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MA Financial Group vs. Home Consortium
Performance |
| Timeline |
| MA Financial Group |
| Home Consortium |
MA Financial and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MA Financial and Home Consortium
The main advantage of trading using opposite MA Financial and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MA Financial position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.| MA Financial vs. Champion Iron | MA Financial vs. Ridley | MA Financial vs. Peel Mining | MA Financial vs. Australian Dairy Farms |
| Home Consortium vs. Queste Communications | Home Consortium vs. Ras Technology Holdings | Home Consortium vs. Advanced Braking Technology | Home Consortium vs. Step One Clothing |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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