Correlation Between MFF Capital and Global Masters
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Global Masters 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 Global Masters 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 Global Masters, you can compare the effects of market volatilities on MFF Capital and Global Masters 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 Global Masters. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Global Masters.
Diversification Opportunities for MFF Capital and Global Masters
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFF and Global is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Global Masters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Masters 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 Global Masters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Masters has no effect on the direction of MFF Capital i.e., MFF Capital and Global Masters go up and down completely randomly.
Pair Corralation between MFF Capital and Global Masters
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.69 times more return on investment than Global Masters. However, MFF Capital Investments is 1.45 times less risky than Global Masters. It trades about 0.15 of its potential returns per unit of risk. Global Masters is currently generating about 0.06 per unit of risk. If you would invest 213.00 in MFF Capital Investments on August 30, 2024 and sell it today you would earn a total of 219.00 from holding MFF Capital Investments or generate 102.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
MFF Capital Investments vs. Global Masters
Performance |
| Timeline |
| MFF Capital Investments |
| Global Masters |
MFF Capital and Global Masters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Global Masters
The main advantage of trading using opposite MFF Capital and Global Masters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Global Masters 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 Global Masters will offset losses from the drop in Global Masters' long position.| MFF Capital vs. GQG Partners DRC | MFF Capital vs. Metrics Master Income | MFF Capital vs. L1 Long Short | MFF Capital vs. Wam Leaders |
| Global Masters vs. Alternative Investment Trust | Global Masters vs. Microequities Asset Management | Global Masters vs. Platinum Asset Management | Global Masters vs. Centaurus Metals |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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