Correlation Between Royalty Management and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Royalty Management and Macmahon 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 Royalty Management and Macmahon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royalty Management Holding and Macmahon Holdings Limited, you can compare the effects of market volatilities on Royalty Management and Macmahon 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 Royalty Management with a short position of Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalty Management and Macmahon Holdings.
Diversification Opportunities for Royalty Management and Macmahon Holdings
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Royalty and Macmahon is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings and Royalty Management 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 Royalty Management Holding are associated (or correlated) with Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Royalty Management i.e., Royalty Management and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Royalty Management and Macmahon Holdings
Given the investment horizon of 90 days Royalty Management Holding is expected to generate 1.08 times more return on investment than Macmahon Holdings. However, Royalty Management is 1.08 times more volatile than Macmahon Holdings Limited. It trades about 0.07 of its potential returns per unit of risk. Macmahon Holdings Limited is currently generating about 0.07 per unit of risk. If you would invest 87.00 in Royalty Management Holding on November 3, 2024 and sell it today you would earn a total of 30.00 from holding Royalty Management Holding or generate 34.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Royalty Management Holding vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Royalty Management |
| Macmahon Holdings |
Royalty Management and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royalty Management and Macmahon Holdings
The main advantage of trading using opposite Royalty Management and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royalty Management position performs unexpectedly, Macmahon 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Royalty Management vs. PennantPark Floating Rate | Royalty Management vs. Gfl Environmental Holdings | Royalty Management vs. Stepstone Group | Royalty Management vs. US Global Investors |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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