Correlation Between MFF Capital and American West
Can any of the company-specific risk be diversified away by investing in both MFF Capital and American West 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 MFF Capital and American West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFF Capital Investments and American West Metals, you can compare the effects of market volatilities on MFF Capital and American West 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 MFF Capital with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and American West.
Diversification Opportunities for MFF Capital and American West
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MFF and American is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West Metals and MFF Capital 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 MFF Capital Investments are associated (or correlated) with American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of MFF Capital i.e., MFF Capital and American West go up and down completely randomly.
Pair Corralation between MFF Capital and American West
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.31 times more return on investment than American West. However, MFF Capital Investments is 3.18 times less risky than American West. It trades about -0.27 of its potential returns per unit of risk. American West Metals is currently generating about -0.29 per unit of risk. If you would invest 472.00 in MFF Capital Investments on November 27, 2024 and sell it today you would lose (28.00) from holding MFF Capital Investments or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. American West Metals
Performance |
| Timeline |
| MFF Capital Investments |
| American West Metals |
MFF Capital and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and American West
The main advantage of trading using opposite MFF Capital and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, American West 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 American West will offset losses from the drop in American West's long position.| MFF Capital vs. Mirrabooka Investments | MFF Capital vs. Treasury Wine Estates | MFF Capital vs. Viva Leisure | MFF Capital vs. Pinnacle Investment Management |
| American West vs. Computershare | American West vs. High Tech Metals | American West vs. Technology One | American West vs. Hansen Technologies |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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