Correlation Between MFF Capital and Capitol Health
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Capitol Health 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 Capitol Health 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 Capitol Health, you can compare the effects of market volatilities on MFF Capital and Capitol Health 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 Capitol Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Capitol Health.
Diversification Opportunities for MFF Capital and Capitol Health
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MFF and Capitol is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health 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 Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of MFF Capital i.e., MFF Capital and Capitol Health go up and down completely randomly.
Pair Corralation between MFF Capital and Capitol Health
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.6 times more return on investment than Capitol Health. However, MFF Capital Investments is 1.67 times less risky than Capitol Health. It trades about 0.34 of its potential returns per unit of risk. Capitol Health is currently generating about 0.06 per unit of risk. If you would invest 420.00 in MFF Capital Investments on September 25, 2024 and sell it today you would earn a total of 45.00 from holding MFF Capital Investments or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
MFF Capital Investments vs. Capitol Health
Performance |
| Timeline |
| MFF Capital Investments |
| Capitol Health |
MFF Capital and Capitol Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Capitol Health
The main advantage of trading using opposite MFF Capital and Capitol Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Capitol Health 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 Capitol Health will offset losses from the drop in Capitol Health's long position.| MFF Capital vs. EVE Health Group | MFF Capital vs. Fisher Paykel Healthcare | MFF Capital vs. Regis Healthcare | MFF Capital vs. Sonic Healthcare |
| Capitol Health vs. Aneka Tambang Tbk | Capitol Health vs. BHP Group Limited | Capitol Health vs. Commonwealth Bank | Capitol Health vs. Commonwealth Bank of |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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