Correlation Between MCI Management and Inter Cars
Can any of the company-specific risk be diversified away by investing in both MCI Management and Inter Cars 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 MCI Management and Inter Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCI Management SA and Inter Cars SA, you can compare the effects of market volatilities on MCI Management and Inter Cars 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 MCI Management with a short position of Inter Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCI Management and Inter Cars.
Diversification Opportunities for MCI Management and Inter Cars
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MCI and Inter is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and Inter Cars SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Cars SA and MCI Management 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 MCI Management SA are associated (or correlated) with Inter Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Cars SA has no effect on the direction of MCI Management i.e., MCI Management and Inter Cars go up and down completely randomly.
Pair Corralation between MCI Management and Inter Cars
Assuming the 90 days trading horizon MCI Management is expected to generate 2.88 times less return on investment than Inter Cars. But when comparing it to its historical volatility, MCI Management SA is 1.46 times less risky than Inter Cars. It trades about 0.07 of its potential returns per unit of risk. Inter Cars SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 47,100 in Inter Cars SA on September 1, 2024 and sell it today you would earn a total of 2,250 from holding Inter Cars SA or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCI Management SA vs. Inter Cars SA
Performance |
| Timeline |
| MCI Management SA |
| Inter Cars SA |
MCI Management and Inter Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCI Management and Inter Cars
The main advantage of trading using opposite MCI Management and Inter Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCI Management position performs unexpectedly, Inter Cars 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 Inter Cars will offset losses from the drop in Inter Cars' long position.| MCI Management vs. Varsav Game Studios | MCI Management vs. Movie Games SA | MCI Management vs. Live Motion Games | MCI Management vs. Road Studio SA |
| Inter Cars vs. Banco Santander SA | Inter Cars vs. UniCredit SpA | Inter Cars vs. CEZ as | Inter Cars vs. Polski Koncern Naftowy |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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