Correlation Between Metro Retail and Alliance Select
Can any of the company-specific risk be diversified away by investing in both Metro Retail and Alliance Select 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 Alliance Select 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 Alliance Select Foods, you can compare the effects of market volatilities on Metro Retail and Alliance Select 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 Alliance Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and Alliance Select.
Diversification Opportunities for Metro Retail and Alliance Select
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Metro and Alliance is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and Alliance Select Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Select Foods 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 Alliance Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Select Foods has no effect on the direction of Metro Retail i.e., Metro Retail and Alliance Select go up and down completely randomly.
Pair Corralation between Metro Retail and Alliance Select
Assuming the 90 days trading horizon Metro Retail Stores is expected to generate 0.77 times more return on investment than Alliance Select. However, Metro Retail Stores is 1.3 times less risky than Alliance Select. It trades about -0.05 of its potential returns per unit of risk. Alliance Select Foods is currently generating about -0.14 per unit of risk. If you would invest 122.00 in Metro Retail Stores on August 28, 2024 and sell it today you would lose (2.00) from holding Metro Retail Stores or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Metro Retail Stores vs. Alliance Select Foods
Performance |
| Timeline |
| Metro Retail Stores |
| Alliance Select Foods |
Metro Retail and Alliance Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Retail and Alliance Select
The main advantage of trading using opposite Metro Retail and Alliance Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail position performs unexpectedly, Alliance Select 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 Alliance Select will offset losses from the drop in Alliance Select's long position.| Metro Retail vs. Allhome Corp | Metro Retail vs. Jollibee Foods Corp | Metro Retail vs. LFM Properties Corp | Metro Retail vs. PXP Energy Corp |
| Alliance Select vs. Atlas Consolidated Mining | Alliance Select vs. Semirara Mining Corp | Alliance Select vs. Apex Mining Co | Alliance Select vs. Lepanto Consolidated Mining |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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