Correlation Between MPX International and Grown Rogue
Can any of the company-specific risk be diversified away by investing in both MPX International and Grown Rogue 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 MPX International and Grown Rogue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MPX International Corp and Grown Rogue International, you can compare the effects of market volatilities on MPX International and Grown Rogue 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 MPX International with a short position of Grown Rogue. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPX International and Grown Rogue.
Diversification Opportunities for MPX International and Grown Rogue
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between MPX and Grown is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding MPX International Corp and Grown Rogue International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grown Rogue International and MPX International 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 MPX International Corp are associated (or correlated) with Grown Rogue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grown Rogue International has no effect on the direction of MPX International i.e., MPX International and Grown Rogue go up and down completely randomly.
Pair Corralation between MPX International and Grown Rogue
Assuming the 90 days horizon MPX International Corp is expected to generate 63.8 times more return on investment than Grown Rogue. However, MPX International is 63.8 times more volatile than Grown Rogue International. It trades about 0.37 of its potential returns per unit of risk. Grown Rogue International is currently generating about -0.07 per unit of risk. If you would invest 0.01 in MPX International Corp on August 28, 2024 and sell it today you would earn a total of 0.10 from holding MPX International Corp or generate 1000.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MPX International Corp vs. Grown Rogue International
Performance |
| Timeline |
| MPX International Corp |
| Grown Rogue International |
MPX International and Grown Rogue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPX International and Grown Rogue
The main advantage of trading using opposite MPX International and Grown Rogue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPX International position performs unexpectedly, Grown Rogue 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 Grown Rogue will offset losses from the drop in Grown Rogue's long position.The idea behind MPX International Corp and Grown Rogue International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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