Correlation Between TRON and MG Credit
Can any of the company-specific risk be diversified away by investing in both TRON and MG Credit 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 TRON and MG Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and MG Credit Income, you can compare the effects of market volatilities on TRON and MG Credit 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 TRON with a short position of MG Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and MG Credit.
Diversification Opportunities for TRON and MG Credit
Modest diversification
The 3 months correlation between TRON and MGCI is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding TRON and MG Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG Credit Income and TRON 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 TRON are associated (or correlated) with MG Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Credit Income has no effect on the direction of TRON i.e., TRON and MG Credit go up and down completely randomly.
Pair Corralation between TRON and MG Credit
Assuming the 90 days trading horizon TRON is expected to under-perform the MG Credit. In addition to that, TRON is 4.68 times more volatile than MG Credit Income. It trades about -0.21 of its total potential returns per unit of risk. MG Credit Income is currently generating about -0.02 per unit of volatility. If you would invest 9,540 in MG Credit Income on October 13, 2024 and sell it today you would lose (40.00) from holding MG Credit Income or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
TRON vs. MG Credit Income
Performance |
| Timeline |
| TRON |
| MG Credit Income |
TRON and MG Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and MG Credit
The main advantage of trading using opposite TRON and MG Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, MG Credit 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 MG Credit will offset losses from the drop in MG Credit's long position.The idea behind TRON and MG Credit Income 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.| MG Credit vs. SupplyMe Capital PLC | MG Credit vs. SM Energy Co | MG Credit vs. FuelCell Energy | MG Credit vs. Grand Vision Media |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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