Correlation Between MA Financial and Metro Mining
Can any of the company-specific risk be diversified away by investing in both MA Financial and Metro Mining 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 Metro Mining 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 Metro Mining, you can compare the effects of market volatilities on MA Financial and Metro Mining 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 Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of MA Financial and Metro Mining.
Diversification Opportunities for MA Financial and Metro Mining
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MAF and Metro is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MA Financial Group and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining 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 Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of MA Financial i.e., MA Financial and Metro Mining go up and down completely randomly.
Pair Corralation between MA Financial and Metro Mining
Assuming the 90 days trading horizon MA Financial is expected to generate 3.85 times less return on investment than Metro Mining. But when comparing it to its historical volatility, MA Financial Group is 2.11 times less risky than Metro Mining. It trades about 0.04 of its potential returns per unit of risk. Metro Mining is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.60 in Metro Mining on September 2, 2024 and sell it today you would earn a total of 4.70 from holding Metro Mining or generate 293.75% 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. Metro Mining
Performance |
| Timeline |
| MA Financial Group |
| Metro Mining |
MA Financial and Metro Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MA Financial and Metro Mining
The main advantage of trading using opposite MA Financial and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MA Financial position performs unexpectedly, Metro Mining 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 Metro Mining will offset losses from the drop in Metro Mining's long position.| MA Financial vs. Inventis | MA Financial vs. Pengana Private Equity | MA Financial vs. PM Capital Global | MA Financial vs. Macquarie Group Ltd |
| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Sandfire Resources NL |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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