Correlation Between Meiko Electronics and Rolls-Royce Holdings
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and Rolls-Royce Holdings 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 Meiko Electronics and Rolls-Royce Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meiko Electronics Co and Rolls Royce Holdings plc, you can compare the effects of market volatilities on Meiko Electronics and Rolls-Royce Holdings 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 Meiko Electronics with a short position of Rolls-Royce Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and Rolls-Royce Holdings.
Diversification Opportunities for Meiko Electronics and Rolls-Royce Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Meiko and Rolls-Royce is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Rolls Royce Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings and Meiko Electronics 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 Meiko Electronics Co are associated (or correlated) with Rolls-Royce Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Rolls-Royce Holdings go up and down completely randomly.
Pair Corralation between Meiko Electronics and Rolls-Royce Holdings
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 1.53 times more return on investment than Rolls-Royce Holdings. However, Meiko Electronics is 1.53 times more volatile than Rolls Royce Holdings plc. It trades about 0.11 of its potential returns per unit of risk. Rolls Royce Holdings plc is currently generating about 0.13 per unit of risk. If you would invest 2,540 in Meiko Electronics Co on September 2, 2024 and sell it today you would earn a total of 3,160 from holding Meiko Electronics Co or generate 124.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. Rolls Royce Holdings plc
Performance |
| Timeline |
| Meiko Electronics |
| Rolls Royce Holdings |
Meiko Electronics and Rolls-Royce Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and Rolls-Royce Holdings
The main advantage of trading using opposite Meiko Electronics and Rolls-Royce Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, Rolls-Royce Holdings 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 Rolls-Royce Holdings will offset losses from the drop in Rolls-Royce Holdings' long position.| Meiko Electronics vs. GRIFFIN MINING LTD | Meiko Electronics vs. Jacquet Metal Service | Meiko Electronics vs. Federal Agricultural Mortgage | Meiko Electronics vs. Harmony Gold Mining |
| Rolls-Royce Holdings vs. Amkor Technology | Rolls-Royce Holdings vs. GLG LIFE TECH | Rolls-Royce Holdings vs. CECO ENVIRONMENTAL | Rolls-Royce Holdings vs. Digilife Technologies Limited |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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