Correlation Between Mesabi Trust and East West
Can any of the company-specific risk be diversified away by investing in both Mesabi Trust and East West 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 Mesabi Trust and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesabi Trust and East West Petroleum, you can compare the effects of market volatilities on Mesabi Trust and East West 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 Mesabi Trust with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesabi Trust and East West.
Diversification Opportunities for Mesabi Trust and East West
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesabi and East is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and East West Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Petroleum and Mesabi Trust 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 Mesabi Trust are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Petroleum has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and East West go up and down completely randomly.
Pair Corralation between Mesabi Trust and East West
Considering the 90-day investment horizon Mesabi Trust is expected to generate 74.18 times less return on investment than East West. But when comparing it to its historical volatility, Mesabi Trust is 18.62 times less risky than East West. It trades about 0.05 of its potential returns per unit of risk. East West Petroleum is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 6.00 in East West Petroleum on September 28, 2024 and sell it today you would lose (3.00) from holding East West Petroleum or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
Mesabi Trust vs. East West Petroleum
Performance |
| Timeline |
| Mesabi Trust |
| East West Petroleum |
Mesabi Trust and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesabi Trust and East West
The main advantage of trading using opposite Mesabi Trust and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesabi Trust position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Mesabi Trust vs. Olympic Steel | Mesabi Trust vs. Universal Stainless Alloy | Mesabi Trust vs. POSCO Holdings | Mesabi Trust vs. Outokumpu Oyj ADR |
| East West vs. Valeura Energy | East West vs. Invictus Energy Limited | East West vs. ConnectOne Bancorp | East West vs. RCM Technologies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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