Correlation Between MFF Capital and Summit Resources
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Summit Resources 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 Summit Resources 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 Summit Resources Limited, you can compare the effects of market volatilities on MFF Capital and Summit Resources 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 Summit Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Summit Resources.
Diversification Opportunities for MFF Capital and Summit Resources
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MFF and Summit is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Summit Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Resources 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 Summit Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Resources has no effect on the direction of MFF Capital i.e., MFF Capital and Summit Resources go up and down completely randomly.
Pair Corralation between MFF Capital and Summit Resources
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.1 times more return on investment than Summit Resources. However, MFF Capital Investments is 10.51 times less risky than Summit Resources. It trades about 0.15 of its potential returns per unit of risk. Summit Resources Limited is currently generating about -0.01 per unit of risk. If you would invest 213.00 in MFF Capital Investments on August 30, 2024 and sell it today you would earn a total of 219.00 from holding MFF Capital Investments or generate 102.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.78% |
| Values | Daily Returns |
MFF Capital Investments vs. Summit Resources Limited
Performance |
| Timeline |
| MFF Capital Investments |
| Summit Resources |
MFF Capital and Summit Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Summit Resources
The main advantage of trading using opposite MFF Capital and Summit Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Summit Resources 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 Summit Resources will offset losses from the drop in Summit Resources' long position.| MFF Capital vs. GQG Partners DRC | MFF Capital vs. Metrics Master Income | MFF Capital vs. L1 Long Short | MFF Capital vs. Wam Leaders |
| Summit Resources vs. Talisman Mining | Summit Resources vs. Hotel Property Investments | Summit Resources vs. Metro Mining | Summit Resources vs. MFF Capital 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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