Correlation Between Eureka Design and MFC Asset
Can any of the company-specific risk be diversified away by investing in both Eureka Design and MFC Asset 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 Eureka Design and MFC Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eureka Design Public and MFC Asset Management, you can compare the effects of market volatilities on Eureka Design and MFC Asset 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 Eureka Design with a short position of MFC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eureka Design and MFC Asset.
Diversification Opportunities for Eureka Design and MFC Asset
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eureka and MFC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eureka Design Public and MFC Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Asset Management and Eureka Design 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 Eureka Design Public are associated (or correlated) with MFC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Asset Management has no effect on the direction of Eureka Design i.e., Eureka Design and MFC Asset go up and down completely randomly.
Pair Corralation between Eureka Design and MFC Asset
Assuming the 90 days trading horizon Eureka Design Public is expected to generate 1.22 times more return on investment than MFC Asset. However, Eureka Design is 1.22 times more volatile than MFC Asset Management. It trades about 0.43 of its potential returns per unit of risk. MFC Asset Management is currently generating about 0.04 per unit of risk. If you would invest 51.00 in Eureka Design Public on September 5, 2024 and sell it today you would earn a total of 16.00 from holding Eureka Design Public or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eureka Design Public vs. MFC Asset Management
Performance |
| Timeline |
| Eureka Design Public |
| MFC Asset Management |
Eureka Design and MFC Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eureka Design and MFC Asset
The main advantage of trading using opposite Eureka Design and MFC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eureka Design position performs unexpectedly, MFC Asset 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 MFC Asset will offset losses from the drop in MFC Asset's long position.| Eureka Design vs. Union Petrochemical Public | Eureka Design vs. TV Thunder Public | Eureka Design vs. Exotic Food Public | Eureka Design vs. TWZ Public |
| MFC Asset vs. Thai Steel Cable | MFC Asset vs. Tropical Canning Public | MFC Asset vs. RB Food Supply | MFC Asset vs. Eureka Design Public |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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