Correlation Between Mayfield Childcare and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both Mayfield Childcare and Hammer Metals 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 Hammer Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayfield Childcare and Hammer Metals, you can compare the effects of market volatilities on Mayfield Childcare and Hammer Metals 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 Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayfield Childcare and Hammer Metals.
Diversification Opportunities for Mayfield Childcare and Hammer Metals
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mayfield and Hammer is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals 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 Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and Hammer Metals go up and down completely randomly.
Pair Corralation between Mayfield Childcare and Hammer Metals
Assuming the 90 days trading horizon Mayfield Childcare is expected to under-perform the Hammer Metals. But the stock apears to be less risky and, when comparing its historical volatility, Mayfield Childcare is 1.14 times less risky than Hammer Metals. The stock trades about -0.12 of its potential returns per unit of risk. The Hammer Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.30 in Hammer Metals on October 14, 2024 and sell it today you would earn a total of 0.20 from holding Hammer Metals or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mayfield Childcare vs. Hammer Metals
Performance |
| Timeline |
| Mayfield Childcare |
| Hammer Metals |
Mayfield Childcare and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mayfield Childcare and Hammer Metals
The main advantage of trading using opposite Mayfield Childcare and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayfield Childcare position performs unexpectedly, Hammer Metals 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| Mayfield Childcare vs. Technology One | Mayfield Childcare vs. Maggie Beer Holdings | Mayfield Childcare vs. Dug Technology | Mayfield Childcare vs. EMvision Medical Devices |
| Hammer Metals vs. Australian Unity Office | Hammer Metals vs. Microequities Asset Management | Hammer Metals vs. Homeco Daily Needs | Hammer Metals vs. Mayfield Childcare |
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 CEOs Directory module to screen CEOs from public companies around the world.
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