Correlation Between Matrix and Shufersal
Can any of the company-specific risk be diversified away by investing in both Matrix and Shufersal 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 Matrix and Shufersal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matrix and Shufersal, you can compare the effects of market volatilities on Matrix and Shufersal 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 Matrix with a short position of Shufersal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matrix and Shufersal.
Diversification Opportunities for Matrix and Shufersal
Weak diversification
The 3 months correlation between Matrix and Shufersal is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Matrix and Shufersal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shufersal and Matrix 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 Matrix are associated (or correlated) with Shufersal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shufersal has no effect on the direction of Matrix i.e., Matrix and Shufersal go up and down completely randomly.
Pair Corralation between Matrix and Shufersal
Assuming the 90 days trading horizon Matrix is expected to generate 4.11 times less return on investment than Shufersal. But when comparing it to its historical volatility, Matrix is 1.06 times less risky than Shufersal. It trades about 0.02 of its potential returns per unit of risk. Shufersal is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 209,811 in Shufersal on August 26, 2024 and sell it today you would earn a total of 135,089 from holding Shufersal or generate 64.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matrix vs. Shufersal
Performance |
| Timeline |
| Matrix |
| Shufersal |
Matrix and Shufersal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matrix and Shufersal
The main advantage of trading using opposite Matrix and Shufersal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matrix position performs unexpectedly, Shufersal 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 Shufersal will offset losses from the drop in Shufersal's long position.The idea behind Matrix and Shufersal 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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