Correlation Between ITALIAN WINE and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE and Meiko Electronics 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 ITALIAN WINE and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and Meiko Electronics Co, you can compare the effects of market volatilities on ITALIAN WINE and Meiko Electronics 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 ITALIAN WINE with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and Meiko Electronics.
Diversification Opportunities for ITALIAN WINE and Meiko Electronics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between ITALIAN and Meiko is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and ITALIAN WINE 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 ITALIAN WINE BRANDS are associated (or correlated) with Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of ITALIAN WINE i.e., ITALIAN WINE and Meiko Electronics go up and down completely randomly.
Pair Corralation between ITALIAN WINE and Meiko Electronics
Assuming the 90 days horizon ITALIAN WINE BRANDS is expected to under-perform the Meiko Electronics. In addition to that, ITALIAN WINE is 1.06 times more volatile than Meiko Electronics Co. It trades about -0.04 of its total potential returns per unit of risk. Meiko Electronics Co is currently generating about -0.03 per unit of volatility. If you would invest 5,600 in Meiko Electronics Co on November 3, 2024 and sell it today you would lose (100.00) from holding Meiko Electronics Co or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. Meiko Electronics Co
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| Meiko Electronics |
ITALIAN WINE and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and Meiko Electronics
The main advantage of trading using opposite ITALIAN WINE and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| ITALIAN WINE vs. MGP Ingredients | ITALIAN WINE vs. NAKED WINES PLC | ITALIAN WINE vs. CHINA TONTINE WINES | ITALIAN WINE vs. Superior Plus Corp |
| Meiko Electronics vs. ecotel communication ag | Meiko Electronics vs. T Mobile | Meiko Electronics vs. Haverty Furniture Companies | Meiko Electronics vs. American Homes 4 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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