Correlation Between MCI Management and X Trade
Can any of the company-specific risk be diversified away by investing in both MCI Management and X Trade 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 X Trade 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 X Trade Brokers, you can compare the effects of market volatilities on MCI Management and X Trade 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 X Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCI Management and X Trade.
Diversification Opportunities for MCI Management and X Trade
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MCI and XTB is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and X Trade Brokers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Trade Brokers 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 X Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Trade Brokers has no effect on the direction of MCI Management i.e., MCI Management and X Trade go up and down completely randomly.
Pair Corralation between MCI Management and X Trade
Assuming the 90 days trading horizon MCI Management is expected to generate 3.12 times less return on investment than X Trade. But when comparing it to its historical volatility, MCI Management SA is 1.28 times less risky than X Trade. It trades about 0.1 of its potential returns per unit of risk. X Trade Brokers is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,562 in X Trade Brokers on August 29, 2024 and sell it today you would earn a total of 518.00 from holding X Trade Brokers or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCI Management SA vs. X Trade Brokers
Performance |
| Timeline |
| MCI Management SA |
| X Trade Brokers |
MCI Management and X Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCI Management and X Trade
The main advantage of trading using opposite MCI Management and X Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCI Management position performs unexpectedly, X Trade 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 X Trade will offset losses from the drop in X Trade's long position.The idea behind MCI Management SA and X Trade Brokers pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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