Correlation Between Metro Retail and COL Financial
Can any of the company-specific risk be diversified away by investing in both Metro Retail and COL Financial 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 Metro Retail and COL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Retail Stores and COL Financial Group, you can compare the effects of market volatilities on Metro Retail and COL Financial 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 Metro Retail with a short position of COL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and COL Financial.
Diversification Opportunities for Metro Retail and COL Financial
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metro and COL is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group and Metro Retail 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 Metro Retail Stores are associated (or correlated) with COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of Metro Retail i.e., Metro Retail and COL Financial go up and down completely randomly.
Pair Corralation between Metro Retail and COL Financial
Assuming the 90 days trading horizon Metro Retail Stores is expected to generate 0.92 times more return on investment than COL Financial. However, Metro Retail Stores is 1.09 times less risky than COL Financial. It trades about 0.01 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.04 per unit of risk. If you would invest 128.00 in Metro Retail Stores on November 26, 2024 and sell it today you would lose (3.00) from holding Metro Retail Stores or give up 2.34% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.34% |
Values | Daily Returns |
Metro Retail Stores vs. COL Financial Group
Performance |
Timeline |
Metro Retail Stores |
COL Financial Group |
Metro Retail and COL Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metro Retail and COL Financial
The main advantage of trading using opposite Metro Retail and COL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail position performs unexpectedly, COL Financial 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 COL Financial will offset losses from the drop in COL Financial's long position.Metro Retail vs. Prime Media Holdings | ||
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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