Correlation Between MFF Capital and Medibank Private
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Medibank Private 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 Medibank Private 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 Medibank Private, you can compare the effects of market volatilities on MFF Capital and Medibank Private 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 Medibank Private. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Medibank Private.
Diversification Opportunities for MFF Capital and Medibank Private
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFF and Medibank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Medibank Private in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medibank Private 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 Medibank Private. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medibank Private has no effect on the direction of MFF Capital i.e., MFF Capital and Medibank Private go up and down completely randomly.
Pair Corralation between MFF Capital and Medibank Private
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 1.28 times more return on investment than Medibank Private. However, MFF Capital is 1.28 times more volatile than Medibank Private. It trades about 0.33 of its potential returns per unit of risk. Medibank Private is currently generating about 0.06 per unit of risk. If you would invest 389.00 in MFF Capital Investments on September 22, 2024 and sell it today you would earn a total of 73.00 from holding MFF Capital Investments or generate 18.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. Medibank Private
Performance |
| Timeline |
| MFF Capital Investments |
| Medibank Private |
MFF Capital and Medibank Private Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Medibank Private
The main advantage of trading using opposite MFF Capital and Medibank Private positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Medibank Private 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 Medibank Private will offset losses from the drop in Medibank Private's long position.| MFF Capital vs. Australian Foundation Investment | MFF Capital vs. Metrics Master Income | MFF Capital vs. L1 Long Short | MFF Capital vs. Wam Leaders |
| Medibank Private vs. Alternative Investment Trust | Medibank Private vs. Dexus Convenience Retail | Medibank Private vs. MFF Capital Investments | Medibank Private vs. Auctus Alternative Investments |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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