Correlation Between Mayr-Melnhof Karton and Cars
Can any of the company-specific risk be diversified away by investing in both Mayr-Melnhof Karton and Cars 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 Mayr-Melnhof Karton and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayr Melnhof Karton AG and Cars Inc, you can compare the effects of market volatilities on Mayr-Melnhof Karton and Cars 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 Mayr-Melnhof Karton with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayr-Melnhof Karton and Cars.
Diversification Opportunities for Mayr-Melnhof Karton and Cars
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mayr-Melnhof and Cars is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mayr Melnhof Karton AG and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Mayr-Melnhof Karton 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 Mayr Melnhof Karton AG are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Mayr-Melnhof Karton i.e., Mayr-Melnhof Karton and Cars go up and down completely randomly.
Pair Corralation between Mayr-Melnhof Karton and Cars
Assuming the 90 days horizon Mayr Melnhof Karton AG is expected to under-perform the Cars. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mayr Melnhof Karton AG is 2.4 times less risky than Cars. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Cars Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,874 in Cars Inc on September 2, 2024 and sell it today you would earn a total of 113.00 from holding Cars Inc or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Mayr Melnhof Karton AG vs. Cars Inc
Performance |
| Timeline |
| Mayr Melnhof Karton |
| Cars Inc |
Mayr-Melnhof Karton and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mayr-Melnhof Karton and Cars
The main advantage of trading using opposite Mayr-Melnhof Karton and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayr-Melnhof Karton position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Mayr-Melnhof Karton vs. Anheuser Busch Inbev | Mayr-Melnhof Karton vs. Wabash National | Mayr-Melnhof Karton vs. FDG Electric Vehicles | Mayr-Melnhof Karton vs. Diageo PLC ADR |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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