Correlation Between Sturm Ruger and MCBC Holdings
Can any of the company-specific risk be diversified away by investing in both Sturm Ruger and MCBC Holdings 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 Sturm Ruger and MCBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sturm Ruger and MCBC Holdings, you can compare the effects of market volatilities on Sturm Ruger and MCBC Holdings 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 Sturm Ruger with a short position of MCBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sturm Ruger and MCBC Holdings.
Diversification Opportunities for Sturm Ruger and MCBC Holdings
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sturm and MCBC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sturm Ruger and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings and Sturm Ruger 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 Sturm Ruger are associated (or correlated) with MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Sturm Ruger i.e., Sturm Ruger and MCBC Holdings go up and down completely randomly.
Pair Corralation between Sturm Ruger and MCBC Holdings
Considering the 90-day investment horizon Sturm Ruger is expected to under-perform the MCBC Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Sturm Ruger is 3.36 times less risky than MCBC Holdings. The stock trades about -0.2 of its potential returns per unit of risk. The MCBC Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,741 in MCBC Holdings on August 27, 2024 and sell it today you would earn a total of 394.00 from holding MCBC Holdings or generate 22.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sturm Ruger vs. MCBC Holdings
Performance |
| Timeline |
| Sturm Ruger |
| MCBC Holdings |
Sturm Ruger and MCBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sturm Ruger and MCBC Holdings
The main advantage of trading using opposite Sturm Ruger and MCBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sturm Ruger position performs unexpectedly, MCBC Holdings 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 MCBC Holdings will offset losses from the drop in MCBC Holdings' long position.| Sturm Ruger vs. Ammo Inc | Sturm Ruger vs. Kratos Defense Security | Sturm Ruger vs. VSE Corporation | Sturm Ruger vs. Ammo Preferred |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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