Correlation Between Micro Leasing and Multibax Public
Can any of the company-specific risk be diversified away by investing in both Micro Leasing and Multibax Public 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 Micro Leasing and Multibax Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micro Leasing Public and Multibax Public, you can compare the effects of market volatilities on Micro Leasing and Multibax Public 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 Micro Leasing with a short position of Multibax Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Leasing and Multibax Public.
Diversification Opportunities for Micro Leasing and Multibax Public
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Micro and Multibax is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Micro Leasing Public and Multibax Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multibax Public and Micro Leasing 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 Micro Leasing Public are associated (or correlated) with Multibax Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multibax Public has no effect on the direction of Micro Leasing i.e., Micro Leasing and Multibax Public go up and down completely randomly.
Pair Corralation between Micro Leasing and Multibax Public
Assuming the 90 days trading horizon Micro Leasing Public is expected to under-perform the Multibax Public. But the stock apears to be less risky and, when comparing its historical volatility, Micro Leasing Public is 15.18 times less risky than Multibax Public. The stock trades about -0.03 of its potential returns per unit of risk. The Multibax Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 310.00 in Multibax Public on September 4, 2024 and sell it today you would lose (112.00) from holding Multibax Public or give up 36.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micro Leasing Public vs. Multibax Public
Performance |
| Timeline |
| Micro Leasing Public |
| Multibax Public |
Micro Leasing and Multibax Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micro Leasing and Multibax Public
The main advantage of trading using opposite Micro Leasing and Multibax Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micro Leasing position performs unexpectedly, Multibax Public 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 Multibax Public will offset losses from the drop in Multibax Public's long position.| Micro Leasing vs. Multibax Public | Micro Leasing vs. Forth Smart Service | Micro Leasing vs. LPN Development Public | Micro Leasing vs. Jasmine International Public |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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