Correlation Between Triton International and Multi Ways
Can any of the company-specific risk be diversified away by investing in both Triton International and Multi Ways 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 Triton International and Multi Ways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triton International Limited and Multi Ways Holdings, you can compare the effects of market volatilities on Triton International and Multi Ways 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 Triton International with a short position of Multi Ways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triton International and Multi Ways.
Diversification Opportunities for Triton International and Multi Ways
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Triton and Multi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and Multi Ways Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Ways Holdings and Triton International 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 Triton International Limited are associated (or correlated) with Multi Ways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Ways Holdings has no effect on the direction of Triton International i.e., Triton International and Multi Ways go up and down completely randomly.
Pair Corralation between Triton International and Multi Ways
Assuming the 90 days trading horizon Triton International is expected to generate 1.02 times less return on investment than Multi Ways. But when comparing it to its historical volatility, Triton International Limited is 4.92 times less risky than Multi Ways. It trades about 0.07 of its potential returns per unit of risk. Multi Ways Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Multi Ways Holdings on September 18, 2024 and sell it today you would lose (0.01) from holding Multi Ways Holdings or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triton International Limited vs. Multi Ways Holdings
Performance |
| Timeline |
| Triton International |
| Multi Ways Holdings |
Triton International and Multi Ways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triton International and Multi Ways
The main advantage of trading using opposite Triton International and Multi Ways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International position performs unexpectedly, Multi Ways 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 Multi Ways will offset losses from the drop in Multi Ways' long position.The idea behind Triton International Limited and Multi Ways Holdings 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.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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