Correlation Between Spring Valley and Malaga Financial
Can any of the company-specific risk be diversified away by investing in both Spring Valley and Malaga Financial 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 Spring Valley and Malaga Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spring Valley Acquisition and Malaga Financial, you can compare the effects of market volatilities on Spring Valley and Malaga Financial 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 Spring Valley with a short position of Malaga Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and Malaga Financial.
Diversification Opportunities for Spring Valley and Malaga Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spring and Malaga is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Spring Valley i.e., Spring Valley and Malaga Financial go up and down completely randomly.
Pair Corralation between Spring Valley and Malaga Financial
Given the investment horizon of 90 days Spring Valley is expected to generate 1.1 times less return on investment than Malaga Financial. But when comparing it to its historical volatility, Spring Valley Acquisition is 8.39 times less risky than Malaga Financial. It trades about 0.11 of its potential returns per unit of risk. Malaga Financial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,105 in Malaga Financial on November 18, 2024 and sell it today you would earn a total of 5.00 from holding Malaga Financial or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spring Valley Acquisition vs. Malaga Financial
Performance |
| Timeline |
| Spring Valley Acquisition |
| Malaga Financial |
Spring Valley and Malaga Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spring Valley and Malaga Financial
The main advantage of trading using opposite Spring Valley and Malaga Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley position performs unexpectedly, Malaga Financial 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 Malaga Financial will offset losses from the drop in Malaga Financial's long position.The idea behind Spring Valley Acquisition and Malaga Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Malaga Financial vs. MF Bancorp | Malaga Financial vs. United Bancorporation of | Malaga Financial vs. Harbor Bankshares | Malaga Financial vs. BankFirst Capital |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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