Correlation Between MFF Capital and Microequities Asset
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Microequities Asset 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 Microequities Asset 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 Microequities Asset Management, you can compare the effects of market volatilities on MFF Capital and Microequities Asset 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 Microequities Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Microequities Asset.
Diversification Opportunities for MFF Capital and Microequities Asset
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MFF and Microequities is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Microequities Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microequities Asset 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 Microequities Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microequities Asset has no effect on the direction of MFF Capital i.e., MFF Capital and Microequities Asset go up and down completely randomly.
Pair Corralation between MFF Capital and Microequities Asset
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.43 times more return on investment than Microequities Asset. However, MFF Capital Investments is 2.35 times less risky than Microequities Asset. It trades about 0.29 of its potential returns per unit of risk. Microequities Asset Management is currently generating about 0.01 per unit of risk. If you would invest 373.00 in MFF Capital Investments on September 12, 2024 and sell it today you would earn a total of 70.00 from holding MFF Capital Investments or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
MFF Capital Investments vs. Microequities Asset Management
Performance |
| Timeline |
| MFF Capital Investments |
| Microequities Asset |
MFF Capital and Microequities Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Microequities Asset
The main advantage of trading using opposite MFF Capital and Microequities Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Microequities Asset 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 Microequities Asset will offset losses from the drop in Microequities Asset's long position.| MFF Capital vs. Fisher Paykel Healthcare | MFF Capital vs. EVE Health Group | MFF Capital vs. BTC Health Limited | MFF Capital vs. Mirrabooka Investments |
| Microequities Asset vs. Australian United Investment | Microequities Asset vs. Clime Investment Management | Microequities Asset vs. REGAL ASIAN INVESTMENTS | Microequities Asset vs. Regal Investment |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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