Correlation Between Mc Endvrs and Global Hemp
Can any of the company-specific risk be diversified away by investing in both Mc Endvrs and Global Hemp 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 Mc Endvrs and Global Hemp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mc Endvrs and Global Hemp Group, you can compare the effects of market volatilities on Mc Endvrs and Global Hemp 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 Mc Endvrs with a short position of Global Hemp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mc Endvrs and Global Hemp.
Diversification Opportunities for Mc Endvrs and Global Hemp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MSMY and Global is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mc Endvrs and Global Hemp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Hemp Group and Mc Endvrs 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 Mc Endvrs are associated (or correlated) with Global Hemp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Hemp Group has no effect on the direction of Mc Endvrs i.e., Mc Endvrs and Global Hemp go up and down completely randomly.
Pair Corralation between Mc Endvrs and Global Hemp
Given the investment horizon of 90 days Mc Endvrs is expected to generate 1.45 times less return on investment than Global Hemp. But when comparing it to its historical volatility, Mc Endvrs is 1.33 times less risky than Global Hemp. It trades about 0.05 of its potential returns per unit of risk. Global Hemp Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Global Hemp Group on August 28, 2024 and sell it today you would lose (0.04) from holding Global Hemp Group or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mc Endvrs vs. Global Hemp Group
Performance |
| Timeline |
| Mc Endvrs |
| Global Hemp Group |
Mc Endvrs and Global Hemp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mc Endvrs and Global Hemp
The main advantage of trading using opposite Mc Endvrs and Global Hemp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mc Endvrs position performs unexpectedly, Global Hemp 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 Global Hemp will offset losses from the drop in Global Hemp's long position.The idea behind Mc Endvrs and Global Hemp Group 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.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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