Correlation Between Mazda and Secure Energy

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Can any of the company-specific risk be diversified away by investing in both Mazda and Secure Energy 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 Mazda and Secure Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mazda Motor and Secure Energy Services, you can compare the effects of market volatilities on Mazda and Secure Energy 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 Mazda with a short position of Secure Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mazda and Secure Energy.

Diversification Opportunities for Mazda and Secure Energy

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Mazda and Secure is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mazda Motor and Secure Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secure Energy Services and Mazda 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 Mazda Motor are associated (or correlated) with Secure Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secure Energy Services has no effect on the direction of Mazda i.e., Mazda and Secure Energy go up and down completely randomly.

Pair Corralation between Mazda and Secure Energy

Assuming the 90 days horizon Mazda Motor is expected to generate 1.78 times more return on investment than Secure Energy. However, Mazda is 1.78 times more volatile than Secure Energy Services. It trades about 0.05 of its potential returns per unit of risk. Secure Energy Services is currently generating about -0.11 per unit of risk. If you would invest  630.00  in Mazda Motor on October 20, 2024 and sell it today you would earn a total of  12.00  from holding Mazda Motor or generate 1.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Mazda Motor  vs.  Secure Energy Services

 Performance 
       Timeline  
Mazda Motor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mazda Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Secure Energy Services 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Secure Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mazda and Secure Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mazda and Secure Energy

The main advantage of trading using opposite Mazda and Secure Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mazda position performs unexpectedly, Secure Energy 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 Secure Energy will offset losses from the drop in Secure Energy's long position.
The idea behind Mazda Motor and Secure Energy Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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