Correlation Between MPC Container and Storebrand ASA
Can any of the company-specific risk be diversified away by investing in both MPC Container and Storebrand ASA 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 MPC Container and Storebrand ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPC Container Ships and Storebrand ASA, you can compare the effects of market volatilities on MPC Container and Storebrand ASA 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 MPC Container with a short position of Storebrand ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPC Container and Storebrand ASA.
Diversification Opportunities for MPC Container and Storebrand ASA
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MPC and Storebrand is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding MPC Container Ships and Storebrand ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storebrand ASA and MPC Container 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 MPC Container Ships are associated (or correlated) with Storebrand ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storebrand ASA has no effect on the direction of MPC Container i.e., MPC Container and Storebrand ASA go up and down completely randomly.
Pair Corralation between MPC Container and Storebrand ASA
Assuming the 90 days trading horizon MPC Container Ships is expected to generate 2.54 times more return on investment than Storebrand ASA. However, MPC Container is 2.54 times more volatile than Storebrand ASA. It trades about 0.01 of its potential returns per unit of risk. Storebrand ASA is currently generating about -0.14 per unit of risk. If you would invest 2,310 in MPC Container Ships on August 29, 2024 and sell it today you would lose (10.00) from holding MPC Container Ships or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MPC Container Ships vs. Storebrand ASA
Performance |
| Timeline |
| MPC Container Ships |
| Storebrand ASA |
MPC Container and Storebrand ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPC Container and Storebrand ASA
The main advantage of trading using opposite MPC Container and Storebrand ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPC Container position performs unexpectedly, Storebrand ASA 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 Storebrand ASA will offset losses from the drop in Storebrand ASA's long position.| MPC Container vs. Shelf Drilling | MPC Container vs. Solstad Offsho | MPC Container vs. Eidesvik Offshore ASA | MPC Container vs. Elkem ASA |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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