Correlation Between Mercantile Investment and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Mercantile Investment and DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC, you can compare the effects of market volatilities on Mercantile Investment and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and DFS Furniture.
Diversification Opportunities for Mercantile Investment and DFS Furniture
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mercantile and DFS is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and DFS Furniture go up and down completely randomly.
Pair Corralation between Mercantile Investment and DFS Furniture
Assuming the 90 days trading horizon The Mercantile Investment is expected to generate 0.56 times more return on investment than DFS Furniture. However, The Mercantile Investment is 1.78 times less risky than DFS Furniture. It trades about 0.05 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.01 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 Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Mercantile Investment vs. DFS Furniture PLC
Performance |
| Timeline |
| The Mercantile Investment |
| DFS Furniture PLC |
Mercantile Investment and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Investment and DFS Furniture
The main advantage of trading using opposite Mercantile Investment and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Investment position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture'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 |
| DFS Furniture vs. Ondine Biomedical | DFS Furniture vs. Europa Metals | DFS Furniture vs. Lendinvest PLC | DFS Furniture vs. Neometals |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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