Correlation Between Matco Foods and EFU General
Can any of the company-specific risk be diversified away by investing in both Matco Foods and EFU General 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 Matco Foods and EFU General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and EFU General Insurance, you can compare the effects of market volatilities on Matco Foods and EFU General 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 Matco Foods with a short position of EFU General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and EFU General.
Diversification Opportunities for Matco Foods and EFU General
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matco and EFU is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and EFU General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFU General Insurance and Matco Foods 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 Matco Foods are associated (or correlated) with EFU General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFU General Insurance has no effect on the direction of Matco Foods i.e., Matco Foods and EFU General go up and down completely randomly.
Pair Corralation between Matco Foods and EFU General
Assuming the 90 days trading horizon Matco Foods is expected to generate 4.97 times less return on investment than EFU General. In addition to that, Matco Foods is 1.13 times more volatile than EFU General Insurance. It trades about 0.09 of its total potential returns per unit of risk. EFU General Insurance is currently generating about 0.51 per unit of volatility. If you would invest 8,888 in EFU General Insurance on September 2, 2024 and sell it today you would earn a total of 4,601 from holding EFU General Insurance or generate 51.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matco Foods vs. EFU General Insurance
Performance |
| Timeline |
| Matco Foods |
| EFU General Insurance |
Matco Foods and EFU General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and EFU General
The main advantage of trading using opposite Matco Foods and EFU General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods position performs unexpectedly, EFU General 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 EFU General will offset losses from the drop in EFU General's long position.| Matco Foods vs. Hi Tech Lubricants | Matco Foods vs. The Organic Meat | Matco Foods vs. Shifa International Hospitals | Matco Foods vs. Unity Foods |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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