Correlation Between Mercantile Investment and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Mercantile Investment and Cairn Homes 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 Cairn Homes 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 Cairn Homes PLC, you can compare the effects of market volatilities on Mercantile Investment and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and Cairn Homes.
Diversification Opportunities for Mercantile Investment and Cairn Homes
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mercantile and Cairn is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and Cairn Homes go up and down completely randomly.
Pair Corralation between Mercantile Investment and Cairn Homes
Assuming the 90 days trading horizon The Mercantile Investment is expected to generate 0.63 times more return on investment than Cairn Homes. However, The Mercantile Investment is 1.58 times less risky than Cairn Homes. It trades about 0.01 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.12 per unit of risk. If you would invest 23,500 in The Mercantile Investment on August 30, 2024 and sell it today you would earn a total of 0.00 from holding The Mercantile Investment or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Mercantile Investment vs. Cairn Homes PLC
Performance |
| Timeline |
| The Mercantile Investment |
| Cairn Homes PLC |
Mercantile Investment and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Investment and Cairn Homes
The main advantage of trading using opposite Mercantile Investment and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Investment position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Mercantile Investment vs. Anglesey Mining | Mercantile Investment vs. AMG Advanced Metallurgical | Mercantile Investment vs. Coeur Mining | Mercantile Investment vs. Capital Drilling |
| Cairn Homes vs. DXC Technology Co | Cairn Homes vs. CAP LEASE AVIATION | Cairn Homes vs. Fevertree Drinks Plc | Cairn Homes vs. Air Products Chemicals |
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.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |