Correlation Between Mexico Closed and New Germany
Can any of the company-specific risk be diversified away by investing in both Mexico Closed and New Germany 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 Mexico Closed and New Germany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mexico Closed and New Germany Closed, you can compare the effects of market volatilities on Mexico Closed and New Germany 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 Mexico Closed with a short position of New Germany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mexico Closed and New Germany.
Diversification Opportunities for Mexico Closed and New Germany
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mexico and New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mexico Closed and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed and Mexico Closed 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 Mexico Closed are associated (or correlated) with New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of Mexico Closed i.e., Mexico Closed and New Germany go up and down completely randomly.
Pair Corralation between Mexico Closed and New Germany
Considering the 90-day investment horizon Mexico Closed is expected to generate 0.93 times more return on investment than New Germany. However, Mexico Closed is 1.07 times less risky than New Germany. It trades about -0.23 of its potential returns per unit of risk. New Germany Closed is currently generating about -0.23 per unit of risk. If you would invest 1,399 in Mexico Closed on August 30, 2024 and sell it today you would lose (84.00) from holding Mexico Closed or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mexico Closed vs. New Germany Closed
Performance |
| Timeline |
| Mexico Closed |
| New Germany Closed |
Mexico Closed and New Germany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mexico Closed and New Germany
The main advantage of trading using opposite Mexico Closed and New Germany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mexico Closed position performs unexpectedly, New Germany 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 New Germany will offset losses from the drop in New Germany's long position.| Mexico Closed vs. Blackrock Muniyield Pennsylvania | Mexico Closed vs. Pimco New York | Mexico Closed vs. First Trust Specialty | Mexico Closed vs. Swiss Helvetia Closed |
| New Germany vs. Eagle Point Income | New Germany vs. Western Asset High | New Germany vs. Nuveen New York | New Germany vs. Western Asset High |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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