Correlation Between Mesabi Trust and MOL PLC
Can any of the company-specific risk be diversified away by investing in both Mesabi Trust and MOL PLC 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 MOL PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesabi Trust and MOL PLC ADR, you can compare the effects of market volatilities on Mesabi Trust and MOL PLC 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 MOL PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesabi Trust and MOL PLC.
Diversification Opportunities for Mesabi Trust and MOL PLC
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mesabi and MOL is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and MOL PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL PLC ADR 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 MOL PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL PLC ADR has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and MOL PLC go up and down completely randomly.
Pair Corralation between Mesabi Trust and MOL PLC
Considering the 90-day investment horizon Mesabi Trust is expected to generate 1.29 times more return on investment than MOL PLC. However, Mesabi Trust is 1.29 times more volatile than MOL PLC ADR. It trades about 0.13 of its potential returns per unit of risk. MOL PLC ADR is currently generating about -0.13 per unit of risk. If you would invest 2,453 in Mesabi Trust on August 27, 2024 and sell it today you would earn a total of 125.00 from holding Mesabi Trust or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesabi Trust vs. MOL PLC ADR
Performance |
| Timeline |
| Mesabi Trust |
| MOL PLC ADR |
Mesabi Trust and MOL PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesabi Trust and MOL PLC
The main advantage of trading using opposite Mesabi Trust and MOL PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesabi Trust position performs unexpectedly, MOL PLC 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 MOL PLC will offset losses from the drop in MOL PLC's long position.The idea behind Mesabi Trust and MOL PLC ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| MOL PLC vs. Equinor ASA ADR | MOL PLC vs. TotalEnergies SE ADR | MOL PLC vs. Ecopetrol SA ADR | MOL PLC vs. National Fuel Gas |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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