Correlation Between MTI Wireless and Axfood AB
Can any of the company-specific risk be diversified away by investing in both MTI Wireless and Axfood AB 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 Axfood AB 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 Axfood AB, you can compare the effects of market volatilities on MTI Wireless and Axfood AB 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 Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Wireless and Axfood AB.
Diversification Opportunities for MTI Wireless and Axfood AB
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MTI and Axfood is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MTI Wireless Edge and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of MTI Wireless i.e., MTI Wireless and Axfood AB go up and down completely randomly.
Pair Corralation between MTI Wireless and Axfood AB
Assuming the 90 days trading horizon MTI Wireless Edge is expected to generate 1.62 times more return on investment than Axfood AB. However, MTI Wireless is 1.62 times more volatile than Axfood AB. It trades about 0.07 of its potential returns per unit of risk. Axfood AB is currently generating about -0.02 per unit of risk. If you would invest 3,138 in MTI Wireless Edge on August 25, 2024 and sell it today you would earn a total of 1,362 from holding MTI Wireless Edge or generate 43.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI Wireless Edge vs. Axfood AB
Performance |
| Timeline |
| MTI Wireless Edge |
| Axfood AB |
MTI Wireless and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI Wireless and Axfood AB
The main advantage of trading using opposite MTI Wireless and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI Wireless position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| MTI Wireless vs. T Mobile | MTI Wireless vs. Aeorema Communications Plc | MTI Wireless vs. Zegona Communications Plc | MTI Wireless vs. Cairo Communication SpA |
| Axfood AB vs. Polar Capital Technology | Axfood AB vs. Albion Technology General | Axfood AB vs. Microchip Technology | Axfood AB vs. Concurrent Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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