Correlation Between Mayfield Childcare and G8 Education
Can any of the company-specific risk be diversified away by investing in both Mayfield Childcare and G8 Education 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 Mayfield Childcare and G8 Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayfield Childcare and G8 Education, you can compare the effects of market volatilities on Mayfield Childcare and G8 Education 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 Mayfield Childcare with a short position of G8 Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayfield Childcare and G8 Education.
Diversification Opportunities for Mayfield Childcare and G8 Education
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mayfield and GEM is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and G8 Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 Education and Mayfield Childcare 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 Mayfield Childcare are associated (or correlated) with G8 Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 Education has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and G8 Education go up and down completely randomly.
Pair Corralation between Mayfield Childcare and G8 Education
Assuming the 90 days trading horizon Mayfield Childcare is expected to generate 1.13 times more return on investment than G8 Education. However, Mayfield Childcare is 1.13 times more volatile than G8 Education. It trades about 0.16 of its potential returns per unit of risk. G8 Education is currently generating about -0.01 per unit of risk. If you would invest 51.00 in Mayfield Childcare on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Mayfield Childcare or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Mayfield Childcare vs. G8 Education
Performance |
| Timeline |
| Mayfield Childcare |
| G8 Education |
Mayfield Childcare and G8 Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mayfield Childcare and G8 Education
The main advantage of trading using opposite Mayfield Childcare and G8 Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayfield Childcare position performs unexpectedly, G8 Education 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 G8 Education will offset losses from the drop in G8 Education's long position.| Mayfield Childcare vs. Summit Resources Limited | Mayfield Childcare vs. Champion Iron | Mayfield Childcare vs. Ridley | Mayfield Childcare vs. Peel Mining |
| G8 Education vs. Summit Resources Limited | G8 Education vs. Champion Iron | G8 Education vs. Ridley | G8 Education vs. Peel Mining |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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