Correlation Between MCBC Holdings and Life Electric
Can any of the company-specific risk be diversified away by investing in both MCBC Holdings and Life Electric 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 MCBC Holdings and Life Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCBC Holdings and Life Electric Vehicles, you can compare the effects of market volatilities on MCBC Holdings and Life Electric 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 MCBC Holdings with a short position of Life Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCBC Holdings and Life Electric.
Diversification Opportunities for MCBC Holdings and Life Electric
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MCBC and Life is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and Life Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Electric Vehicles and MCBC Holdings 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 MCBC Holdings are associated (or correlated) with Life Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Electric Vehicles has no effect on the direction of MCBC Holdings i.e., MCBC Holdings and Life Electric go up and down completely randomly.
Pair Corralation between MCBC Holdings and Life Electric
Given the investment horizon of 90 days MCBC Holdings is expected to generate 1.79 times less return on investment than Life Electric. But when comparing it to its historical volatility, MCBC Holdings is 2.13 times less risky than Life Electric. It trades about 0.21 of its potential returns per unit of risk. Life Electric Vehicles is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Life Electric Vehicles on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Life Electric Vehicles or generate 36.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MCBC Holdings vs. Life Electric Vehicles
Performance |
| Timeline |
| MCBC Holdings |
| Life Electric Vehicles |
MCBC Holdings and Life Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCBC Holdings and Life Electric
The main advantage of trading using opposite MCBC Holdings and Life Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCBC Holdings position performs unexpectedly, Life Electric 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 Life Electric will offset losses from the drop in Life Electric's long position.| MCBC Holdings vs. Malibu Boats | MCBC Holdings vs. Onewater Marine | MCBC Holdings vs. Heidrick Struggles International | MCBC Holdings vs. Johnson Outdoors |
| Life Electric vs. Isuzu Motors | Life Electric vs. Renault SA | Life Electric vs. Toyota Motor Corp | Life Electric vs. Porsche Automobile Holding |
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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