Correlation Between Overlay Shares and Mairs Power
Can any of the company-specific risk be diversified away by investing in both Overlay Shares and Mairs Power 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 Overlay Shares and Mairs Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overlay Shares Municipal and Mairs Power Minnesota, you can compare the effects of market volatilities on Overlay Shares and Mairs Power 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 Overlay Shares with a short position of Mairs Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overlay Shares and Mairs Power.
Diversification Opportunities for Overlay Shares and Mairs Power
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Overlay and Mairs is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Overlay Shares Municipal and Mairs Power Minnesota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Minnesota and Overlay Shares 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 Overlay Shares Municipal are associated (or correlated) with Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Minnesota has no effect on the direction of Overlay Shares i.e., Overlay Shares and Mairs Power go up and down completely randomly.
Pair Corralation between Overlay Shares and Mairs Power
Considering the 90-day investment horizon Overlay Shares is expected to generate 1.79 times less return on investment than Mairs Power. But when comparing it to its historical volatility, Overlay Shares Municipal is 1.06 times less risky than Mairs Power. It trades about 0.04 of its potential returns per unit of risk. Mairs Power Minnesota is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,204 in Mairs Power Minnesota on November 5, 2024 and sell it today you would earn a total of 11.00 from holding Mairs Power Minnesota or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Overlay Shares Municipal vs. Mairs Power Minnesota
Performance |
| Timeline |
| Overlay Shares Municipal |
| Mairs Power Minnesota |
Overlay Shares and Mairs Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overlay Shares and Mairs Power
The main advantage of trading using opposite Overlay Shares and Mairs Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overlay Shares position performs unexpectedly, Mairs Power 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 Mairs Power will offset losses from the drop in Mairs Power's long position.| Overlay Shares vs. Overlay Shares Core | Overlay Shares vs. Overlay Shares Large | Overlay Shares vs. Overlay Shares Foreign | Overlay Shares vs. OVS SpA |
| Mairs Power vs. BlackRock Intermediate Muni | Mairs Power vs. IQ MacKay Municipal | Mairs Power vs. Overlay Shares Municipal | Mairs Power vs. IQ MacKay Municipal |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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