Correlation Between Sky Metals and MFF Capital
Can any of the company-specific risk be diversified away by investing in both Sky Metals and MFF Capital 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 Sky Metals and MFF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and MFF Capital Investments, you can compare the effects of market volatilities on Sky Metals and MFF Capital 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 Sky Metals with a short position of MFF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and MFF Capital.
Diversification Opportunities for Sky Metals and MFF Capital
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sky and MFF is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and Sky Metals 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 Sky Metals are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of Sky Metals i.e., Sky Metals and MFF Capital go up and down completely randomly.
Pair Corralation between Sky Metals and MFF Capital
Assuming the 90 days trading horizon Sky Metals is expected to generate 2.81 times more return on investment than MFF Capital. However, Sky Metals is 2.81 times more volatile than MFF Capital Investments. It trades about -0.08 of its potential returns per unit of risk. MFF Capital Investments is currently generating about -0.27 per unit of risk. If you would invest 5.20 in Sky Metals on November 27, 2024 and sell it today you would lose (0.30) from holding Sky Metals or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sky Metals vs. MFF Capital Investments
Performance |
| Timeline |
| Sky Metals |
| MFF Capital Investments |
Sky Metals and MFF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and MFF Capital
The main advantage of trading using opposite Sky Metals and MFF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, MFF Capital 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 MFF Capital will offset losses from the drop in MFF Capital's long position.| Sky Metals vs. Lunnon Metals | Sky Metals vs. Air New Zealand | Sky Metals vs. ACDC Metals | Sky Metals vs. Neurotech International |
| MFF Capital vs. Mirrabooka Investments | MFF Capital vs. Treasury Wine Estates | MFF Capital vs. Viva Leisure | MFF Capital vs. Pinnacle Investment Management |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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