Correlation Between Summit Resources and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both Summit Resources and Mayfield Childcare 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 Summit Resources and Mayfield Childcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Resources Limited and Mayfield Childcare, you can compare the effects of market volatilities on Summit Resources and Mayfield Childcare 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 Summit Resources with a short position of Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Resources and Mayfield Childcare.
Diversification Opportunities for Summit Resources and Mayfield Childcare
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Mayfield is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Summit Resources Limited and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare and Summit Resources 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 Summit Resources Limited are associated (or correlated) with Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of Summit Resources i.e., Summit Resources and Mayfield Childcare go up and down completely randomly.
Pair Corralation between Summit Resources and Mayfield Childcare
Assuming the 90 days trading horizon Summit Resources Limited is expected to under-perform the Mayfield Childcare. In addition to that, Summit Resources is 1.71 times more volatile than Mayfield Childcare. It trades about -0.26 of its total potential returns per unit of risk. Mayfield Childcare is currently generating about -0.03 per unit of volatility. If you would invest 43.00 in Mayfield Childcare on November 27, 2024 and sell it today you would lose (1.00) from holding Mayfield Childcare or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Resources Limited vs. Mayfield Childcare
Performance |
| Timeline |
| Summit Resources |
| Mayfield Childcare |
Summit Resources and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Resources and Mayfield Childcare
The main advantage of trading using opposite Summit Resources and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Resources position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| Summit Resources vs. Northern Star Resources | Summit Resources vs. Alcoa Inc | Summit Resources vs. Evolution Mining | Summit Resources vs. Bluescope Steel |
| Mayfield Childcare vs. Macquarie Bank Limited | Mayfield Childcare vs. Prime Financial Group | Mayfield Childcare vs. Commonwealth Bank of | Mayfield Childcare vs. Cleanspace Holdings |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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