Correlation Between MTN and Blue Label
Can any of the company-specific risk be diversified away by investing in both MTN and Blue Label 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 MTN and Blue Label into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTN Group and Blue Label Telecoms, you can compare the effects of market volatilities on MTN and Blue Label 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 MTN with a short position of Blue Label. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN and Blue Label.
Diversification Opportunities for MTN and Blue Label
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MTN and Blue is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group and Blue Label Telecoms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Label Telecoms and MTN 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 MTN Group are associated (or correlated) with Blue Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Label Telecoms has no effect on the direction of MTN i.e., MTN and Blue Label go up and down completely randomly.
Pair Corralation between MTN and Blue Label
Assuming the 90 days trading horizon MTN Group is expected to under-perform the Blue Label. In addition to that, MTN is 1.44 times more volatile than Blue Label Telecoms. It trades about -0.3 of its total potential returns per unit of risk. Blue Label Telecoms is currently generating about -0.37 per unit of volatility. If you would invest 55,800 in Blue Label Telecoms on August 28, 2024 and sell it today you would lose (4,000) from holding Blue Label Telecoms or give up 7.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTN Group vs. Blue Label Telecoms
Performance |
| Timeline |
| MTN Group |
| Blue Label Telecoms |
MTN and Blue Label Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN and Blue Label
The main advantage of trading using opposite MTN and Blue Label positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN position performs unexpectedly, Blue Label 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 Blue Label will offset losses from the drop in Blue Label's long position.| MTN vs. CA Sales Holdings | MTN vs. Harmony Gold Mining | MTN vs. Trematon Capital Investments | MTN vs. Brimstone Investment |
| Blue Label vs. Harmony Gold Mining | Blue Label vs. Capitec Bank Holdings | Blue Label vs. Safari Investments RSA | Blue Label vs. Reinet Investments SCA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |