Correlation Between Tejon Ranch and MDU Resources
Can any of the company-specific risk be diversified away by investing in both Tejon Ranch and MDU Resources 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 Tejon Ranch and MDU Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tejon Ranch Co and MDU Resources Group, you can compare the effects of market volatilities on Tejon Ranch and MDU Resources 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 Tejon Ranch with a short position of MDU Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tejon Ranch and MDU Resources.
Diversification Opportunities for Tejon Ranch and MDU Resources
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tejon and MDU is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tejon Ranch Co and MDU Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDU Resources Group and Tejon Ranch 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 Tejon Ranch Co are associated (or correlated) with MDU Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDU Resources Group has no effect on the direction of Tejon Ranch i.e., Tejon Ranch and MDU Resources go up and down completely randomly.
Pair Corralation between Tejon Ranch and MDU Resources
Considering the 90-day investment horizon Tejon Ranch is expected to generate 26.23 times less return on investment than MDU Resources. In addition to that, Tejon Ranch is 1.16 times more volatile than MDU Resources Group. It trades about 0.0 of its total potential returns per unit of risk. MDU Resources Group is currently generating about 0.12 per unit of volatility. If you would invest 1,103 in MDU Resources Group on August 28, 2024 and sell it today you would earn a total of 910.00 from holding MDU Resources Group or generate 82.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tejon Ranch Co vs. MDU Resources Group
Performance |
| Timeline |
| Tejon Ranch |
| MDU Resources Group |
Tejon Ranch and MDU Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tejon Ranch and MDU Resources
The main advantage of trading using opposite Tejon Ranch and MDU Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tejon Ranch position performs unexpectedly, MDU Resources 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 MDU Resources will offset losses from the drop in MDU Resources' long position.| Tejon Ranch vs. Steel Partners Holdings | Tejon Ranch vs. Compass Diversified | Tejon Ranch vs. Brookfield Business Partners | Tejon Ranch vs. Matthews International |
| MDU Resources vs. Griffon | MDU Resources vs. Brookfield Business Partners | MDU Resources vs. Matthews International | MDU Resources vs. Steel Partners 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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