Correlation Between MFF Capital and Perpetual Credit
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Perpetual Credit 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 Perpetual Credit 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 Perpetual Credit Income, you can compare the effects of market volatilities on MFF Capital and Perpetual Credit 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 Perpetual Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Perpetual Credit.
Diversification Opportunities for MFF Capital and Perpetual Credit
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFF and Perpetual is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Perpetual Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Credit Income 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 Perpetual Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Credit Income has no effect on the direction of MFF Capital i.e., MFF Capital and Perpetual Credit go up and down completely randomly.
Pair Corralation between MFF Capital and Perpetual Credit
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.87 times more return on investment than Perpetual Credit. However, MFF Capital Investments is 1.15 times less risky than Perpetual Credit. It trades about 0.15 of its potential returns per unit of risk. Perpetual Credit Income is currently generating about 0.06 per unit of risk. If you would invest 212.00 in MFF Capital Investments on September 12, 2024 and sell it today you would earn a total of 231.00 from holding MFF Capital Investments or generate 108.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. Perpetual Credit Income
Performance |
| Timeline |
| MFF Capital Investments |
| Perpetual Credit Income |
MFF Capital and Perpetual Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Perpetual Credit
The main advantage of trading using opposite MFF Capital and Perpetual Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Perpetual Credit 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 Perpetual Credit will offset losses from the drop in Perpetual Credit's long position.| MFF Capital vs. Retail Food Group | MFF Capital vs. Duxton Broadacre Farms | MFF Capital vs. Black Rock Mining | MFF Capital vs. Dexus Convenience Retail |
| Perpetual Credit vs. MFF Capital Investments | Perpetual Credit vs. Pinnacle Investment Management | Perpetual Credit vs. My Foodie Box | Perpetual Credit vs. BTC Health Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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