Correlation Between MFF Capital and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Mount Gibson 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 Mount Gibson 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 Mount Gibson Iron, you can compare the effects of market volatilities on MFF Capital and Mount Gibson 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 Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Mount Gibson.
Diversification Opportunities for MFF Capital and Mount Gibson
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MFF and Mount is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron 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 Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of MFF Capital i.e., MFF Capital and Mount Gibson go up and down completely randomly.
Pair Corralation between MFF Capital and Mount Gibson
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.54 times more return on investment than Mount Gibson. However, MFF Capital Investments is 1.85 times less risky than Mount Gibson. It trades about 0.19 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about -0.03 per unit of risk. If you would invest 444.00 in MFF Capital Investments on November 8, 2024 and sell it today you would earn a total of 39.00 from holding MFF Capital Investments or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. Mount Gibson Iron
Performance |
| Timeline |
| MFF Capital Investments |
| Mount Gibson Iron |
MFF Capital and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Mount Gibson
The main advantage of trading using opposite MFF Capital and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| MFF Capital vs. COG Financial Services | MFF Capital vs. Westpac Banking | MFF Capital vs. Qbe Insurance Group | MFF Capital vs. National Australia Bank |
| Mount Gibson vs. Pure Foods Tasmania | Mount Gibson vs. Austco Healthcare | Mount Gibson vs. Black Rock Mining | Mount Gibson vs. Mayfield Childcare |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Commodity Directory Find actively traded commodities issued by global exchanges |