Correlation Between Mueller Industries and China International
Can any of the company-specific risk be diversified away by investing in both Mueller Industries and China International 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 Mueller Industries and China International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mueller Industries and China International Marine, you can compare the effects of market volatilities on Mueller Industries and China International 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 Mueller Industries with a short position of China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mueller Industries and China International.
Diversification Opportunities for Mueller Industries and China International
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mueller and China is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mueller Industries and China International Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International and Mueller Industries 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 Mueller Industries are associated (or correlated) with China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of Mueller Industries i.e., Mueller Industries and China International go up and down completely randomly.
Pair Corralation between Mueller Industries and China International
Assuming the 90 days horizon Mueller Industries is expected to generate 1.7 times more return on investment than China International. However, Mueller Industries is 1.7 times more volatile than China International Marine. It trades about 0.08 of its potential returns per unit of risk. China International Marine is currently generating about -0.11 per unit of risk. If you would invest 6,482 in Mueller Industries on October 14, 2024 and sell it today you would earn a total of 1,068 from holding Mueller Industries or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mueller Industries vs. China International Marine
Performance |
| Timeline |
| Mueller Industries |
| China International |
Mueller Industries and China International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mueller Industries and China International
The main advantage of trading using opposite Mueller Industries and China International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mueller Industries position performs unexpectedly, China International 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 China International will offset losses from the drop in China International's long position.| Mueller Industries vs. BANKINTER ADR 2007 | Mueller Industries vs. CHRYSALIS INVESTMENTS LTD | Mueller Industries vs. Keck Seng Investments | Mueller Industries vs. Direct Line Insurance |
| China International vs. CONTAGIOUS GAMING INC | China International vs. Boyd Gaming | China International vs. Zijin Mining Group | China International vs. GREENX METALS LTD |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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