Correlation Between MTN and Investec PLC
Can any of the company-specific risk be diversified away by investing in both MTN and Investec 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 MTN and Investec PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTN Group and Investec PLC, you can compare the effects of market volatilities on MTN and Investec 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 MTN with a short position of Investec PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN and Investec PLC.
Diversification Opportunities for MTN and Investec PLC
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MTN and Investec is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group and Investec PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec PLC 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 Investec PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec PLC has no effect on the direction of MTN i.e., MTN and Investec PLC go up and down completely randomly.
Pair Corralation between MTN and Investec PLC
Assuming the 90 days trading horizon MTN Group is expected to under-perform the Investec PLC. In addition to that, MTN is 1.02 times more volatile than Investec PLC. It trades about -0.09 of its total potential returns per unit of risk. Investec PLC is currently generating about -0.05 per unit of volatility. If you would invest 1,363,400 in Investec PLC on September 2, 2024 and sell it today you would lose (64,900) from holding Investec PLC or give up 4.76% 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. Investec PLC
Performance |
| Timeline |
| MTN Group |
| Investec PLC |
MTN and Investec PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN and Investec PLC
The main advantage of trading using opposite MTN and Investec PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN position performs unexpectedly, Investec 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 Investec PLC will offset losses from the drop in Investec PLC's long position.| MTN vs. Master Drilling Group | MTN vs. British American Tobacco | MTN vs. HomeChoice Investments | MTN vs. Lesaka Technologies |
| Investec PLC vs. Afine Investments | Investec PLC vs. Astoria Investments | Investec PLC vs. Safari Investments RSA | Investec PLC vs. Lesaka 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |