Correlation Between Mulberry Group and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both Mulberry Group and Innovative Industrial 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 Mulberry Group and Innovative Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mulberry Group PLC and Innovative Industrial Properties, you can compare the effects of market volatilities on Mulberry Group and Innovative Industrial 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 Mulberry Group with a short position of Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mulberry Group and Innovative Industrial.
Diversification Opportunities for Mulberry Group and Innovative Industrial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mulberry and Innovative is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mulberry Group PLC and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and Mulberry Group 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 Mulberry Group PLC are associated (or correlated) with Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Mulberry Group i.e., Mulberry Group and Innovative Industrial go up and down completely randomly.
Pair Corralation between Mulberry Group and Innovative Industrial
Assuming the 90 days trading horizon Mulberry Group PLC is expected to generate 1.1 times more return on investment than Innovative Industrial. However, Mulberry Group is 1.1 times more volatile than Innovative Industrial Properties. It trades about -0.1 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about -0.2 per unit of risk. If you would invest 11,000 in Mulberry Group PLC on September 1, 2024 and sell it today you would lose (1,150) from holding Mulberry Group PLC or give up 10.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mulberry Group PLC vs. Innovative Industrial Properti
Performance |
| Timeline |
| Mulberry Group PLC |
| Innovative Industrial |
Mulberry Group and Innovative Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mulberry Group and Innovative Industrial
The main advantage of trading using opposite Mulberry Group and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mulberry Group position performs unexpectedly, Innovative Industrial 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 Innovative Industrial will offset losses from the drop in Innovative Industrial's long position.| Mulberry Group vs. Auto Trader Group | Mulberry Group vs. Diversified Energy | Mulberry Group vs. Air Products Chemicals | Mulberry Group vs. Lowland Investment Co |
| Innovative Industrial vs. Uniper SE | Innovative Industrial vs. Mulberry Group PLC | Innovative Industrial vs. London Security Plc | Innovative Industrial vs. Triad Group PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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