Correlation Between MTI Wireless and Lowe#39;s Cos
Can any of the company-specific risk be diversified away by investing in both MTI Wireless and Lowe#39;s Cos 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 MTI Wireless and Lowe#39;s Cos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI Wireless Edge and Lowe Cos, you can compare the effects of market volatilities on MTI Wireless and Lowe#39;s Cos 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 MTI Wireless with a short position of Lowe#39;s Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Wireless and Lowe#39;s Cos.
Diversification Opportunities for MTI Wireless and Lowe#39;s Cos
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MTI and Lowe#39;s is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MTI Wireless Edge and Lowe Cos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowe#39;s Cos and MTI Wireless 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 MTI Wireless Edge are associated (or correlated) with Lowe#39;s Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowe#39;s Cos has no effect on the direction of MTI Wireless i.e., MTI Wireless and Lowe#39;s Cos go up and down completely randomly.
Pair Corralation between MTI Wireless and Lowe#39;s Cos
Assuming the 90 days trading horizon MTI Wireless Edge is expected to under-perform the Lowe#39;s Cos. But the stock apears to be less risky and, when comparing its historical volatility, MTI Wireless Edge is 1.56 times less risky than Lowe#39;s Cos. The stock trades about -0.14 of its potential returns per unit of risk. The Lowe Cos is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 26,358 in Lowe Cos on August 30, 2024 and sell it today you would earn a total of 910.00 from holding Lowe Cos or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI Wireless Edge vs. Lowe Cos
Performance |
| Timeline |
| MTI Wireless Edge |
| Lowe#39;s Cos |
MTI Wireless and Lowe#39;s Cos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI Wireless and Lowe#39;s Cos
The main advantage of trading using opposite MTI Wireless and Lowe#39;s Cos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI Wireless position performs unexpectedly, Lowe#39;s Cos 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 Lowe#39;s Cos will offset losses from the drop in Lowe#39;s Cos' long position.| MTI Wireless vs. Lloyds Banking Group | MTI Wireless vs. Premier African Minerals | MTI Wireless vs. 88 Energy | MTI Wireless vs. Vodafone Group PLC |
| Lowe#39;s Cos vs. Orient Telecoms | Lowe#39;s Cos vs. MTI Wireless Edge | Lowe#39;s Cos vs. Spirent Communications plc | Lowe#39;s Cos vs. Infrastrutture Wireless Italiane |
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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