Correlation Between MFF Capital and PM Capital
Can any of the company-specific risk be diversified away by investing in both MFF Capital and PM Capital 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 PM Capital 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 PM Capital Global, you can compare the effects of market volatilities on MFF Capital and PM Capital 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 PM Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and PM Capital.
Diversification Opportunities for MFF Capital and PM Capital
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MFF and PGF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and PM Capital Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PM Capital Global 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 PM Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PM Capital Global has no effect on the direction of MFF Capital i.e., MFF Capital and PM Capital go up and down completely randomly.
Pair Corralation between MFF Capital and PM Capital
Assuming the 90 days trading horizon MFF Capital Investments is expected to under-perform the PM Capital. But the stock apears to be less risky and, when comparing its historical volatility, MFF Capital Investments is 1.3 times less risky than PM Capital. The stock trades about -0.27 of its potential returns per unit of risk. The PM Capital Global is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 236.00 in PM Capital Global on November 27, 2024 and sell it today you would earn a total of 7.00 from holding PM Capital Global or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. PM Capital Global
Performance |
| Timeline |
| MFF Capital Investments |
| PM Capital Global |
MFF Capital and PM Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and PM Capital
The main advantage of trading using opposite MFF Capital and PM Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, PM Capital 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 PM Capital will offset losses from the drop in PM Capital's long position.| MFF Capital vs. Mirrabooka Investments | MFF Capital vs. Treasury Wine Estates | MFF Capital vs. Viva Leisure | MFF Capital vs. Pinnacle Investment Management |
| PM Capital vs. Truscott Mining Corp | PM Capital vs. Centaurus Metals | PM Capital vs. Janison Education Group | PM Capital vs. Aeon 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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