Correlation Between MFF Capital and BKI Investment
Can any of the company-specific risk be diversified away by investing in both MFF Capital and BKI Investment 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 BKI Investment 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 BKI Investment, you can compare the effects of market volatilities on MFF Capital and BKI Investment 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and BKI Investment.
Diversification Opportunities for MFF Capital and BKI Investment
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between MFF and BKI is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of MFF Capital i.e., MFF Capital and BKI Investment go up and down completely randomly.
Pair Corralation between MFF Capital and BKI Investment
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 1.22 times more return on investment than BKI Investment. However, MFF Capital is 1.22 times more volatile than BKI Investment. It trades about 0.13 of its potential returns per unit of risk. BKI Investment is currently generating about 0.02 per unit of risk. If you would invest 220.00 in MFF Capital Investments on August 25, 2024 and sell it today you would earn a total of 197.00 from holding MFF Capital Investments or generate 89.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. BKI Investment
Performance |
| Timeline |
| MFF Capital Investments |
| BKI Investment |
MFF Capital and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and BKI Investment
The main advantage of trading using opposite MFF Capital and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| MFF Capital vs. Clime Investment Management | MFF Capital vs. Pinnacle Investment Management | MFF Capital vs. A1 Investments Resources | MFF Capital vs. M3 Mining |
| BKI Investment vs. Australian Foundation Investment | BKI Investment vs. GQG Partners DRC | BKI Investment vs. MFF Capital Investments | BKI Investment vs. Metrics Master Income |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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