Correlation Between Mercantile Investment and Catena Media
Can any of the company-specific risk be diversified away by investing in both Mercantile Investment and Catena Media 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 Mercantile Investment and Catena Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Mercantile Investment and Catena Media PLC, you can compare the effects of market volatilities on Mercantile Investment and Catena Media 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 Mercantile Investment with a short position of Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and Catena Media.
Diversification Opportunities for Mercantile Investment and Catena Media
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercantile and Catena is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and Catena Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena Media PLC and Mercantile Investment 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 The Mercantile Investment are associated (or correlated) with Catena Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena Media PLC has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and Catena Media go up and down completely randomly.
Pair Corralation between Mercantile Investment and Catena Media
Assuming the 90 days trading horizon The Mercantile Investment is expected to generate 0.31 times more return on investment than Catena Media. However, The Mercantile Investment is 3.19 times less risky than Catena Media. It trades about 0.05 of its potential returns per unit of risk. Catena Media PLC is currently generating about -0.07 per unit of risk. If you would invest 18,331 in The Mercantile Investment on August 30, 2024 and sell it today you would earn a total of 5,169 from holding The Mercantile Investment or generate 28.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Mercantile Investment vs. Catena Media PLC
Performance |
| Timeline |
| The Mercantile Investment |
| Catena Media PLC |
Mercantile Investment and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Investment and Catena Media
The main advantage of trading using opposite Mercantile Investment and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Investment position performs unexpectedly, Catena Media 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 Catena Media will offset losses from the drop in Catena Media's long position.| Mercantile Investment vs. LPKF Laser Electronics | Mercantile Investment vs. Gaming Realms plc | Mercantile Investment vs. Compal Electronics GDR | Mercantile Investment vs. Flow Traders NV |
| Catena Media vs. Lendinvest PLC | Catena Media vs. Neometals | Catena Media vs. Albion Technology General | Catena Media vs. Jupiter Fund Management |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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