Correlation Between Oakley Capital and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both Oakley Capital and Mercantile Investment 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 Oakley Capital and Mercantile Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakley Capital Investments and The Mercantile Investment, you can compare the effects of market volatilities on Oakley Capital and Mercantile Investment 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 Oakley Capital with a short position of Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakley Capital and Mercantile Investment.
Diversification Opportunities for Oakley Capital and Mercantile Investment
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oakley and Mercantile is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Oakley Capital Investments and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile Investment and Oakley Capital 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 Oakley Capital Investments are associated (or correlated) with Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Oakley Capital i.e., Oakley Capital and Mercantile Investment go up and down completely randomly.
Pair Corralation between Oakley Capital and Mercantile Investment
Assuming the 90 days trading horizon Oakley Capital is expected to generate 1.17 times less return on investment than Mercantile Investment. But when comparing it to its historical volatility, Oakley Capital Investments is 1.01 times less risky than Mercantile Investment. It trades about 0.04 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 19,395 in The Mercantile Investment on September 3, 2024 and sell it today you would earn a total of 4,355 from holding The Mercantile Investment or generate 22.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakley Capital Investments vs. The Mercantile Investment
Performance |
| Timeline |
| Oakley Capital Inves |
| The Mercantile Investment |
Oakley Capital and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakley Capital and Mercantile Investment
The main advantage of trading using opposite Oakley Capital and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakley Capital position performs unexpectedly, Mercantile Investment 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| Oakley Capital vs. Universal Display Corp | Oakley Capital vs. Central Asia Metals | Oakley Capital vs. Kaufman Et Broad | Oakley Capital vs. Roadside Real Estate |
| Mercantile Investment vs. SupplyMe Capital PLC | Mercantile Investment vs. 88 Energy | Mercantile Investment vs. Vodafone Group PLC | Mercantile Investment vs. Vodafone 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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