Correlation Between MMA Offshore and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both MMA Offshore and Iridium Communications 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 MMA Offshore and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MMA Offshore Limited and Iridium Communications, you can compare the effects of market volatilities on MMA Offshore and Iridium Communications 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 MMA Offshore with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MMA Offshore and Iridium Communications.
Diversification Opportunities for MMA Offshore and Iridium Communications
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MMA and Iridium is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MMA Offshore Limited and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and MMA Offshore 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 MMA Offshore Limited are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of MMA Offshore i.e., MMA Offshore and Iridium Communications go up and down completely randomly.
Pair Corralation between MMA Offshore and Iridium Communications
Assuming the 90 days horizon MMA Offshore Limited is expected to generate 27.27 times more return on investment than Iridium Communications. However, MMA Offshore is 27.27 times more volatile than Iridium Communications. It trades about 0.08 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.03 per unit of risk. If you would invest 16.00 in MMA Offshore Limited on September 12, 2024 and sell it today you would earn a total of 134.00 from holding MMA Offshore Limited or generate 837.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 61.29% |
| Values | Daily Returns |
MMA Offshore Limited vs. Iridium Communications
Performance |
| Timeline |
| MMA Offshore Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Iridium Communications |
MMA Offshore and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MMA Offshore and Iridium Communications
The main advantage of trading using opposite MMA Offshore and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MMA Offshore position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| MMA Offshore vs. Iridium Communications | MMA Offshore vs. Axalta Coating Systems | MMA Offshore vs. Sensient Technologies | MMA Offshore vs. Luxfer Holdings PLC |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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