Correlation Between Seven West and MSA Safety
Can any of the company-specific risk be diversified away by investing in both Seven West and MSA Safety 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 Seven West and MSA Safety into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and MSA Safety Incorporated, you can compare the effects of market volatilities on Seven West and MSA Safety 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 Seven West with a short position of MSA Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and MSA Safety.
Diversification Opportunities for Seven West and MSA Safety
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seven and MSA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and MSA Safety Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSA Safety and Seven West 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 Seven West Media are associated (or correlated) with MSA Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSA Safety has no effect on the direction of Seven West i.e., Seven West and MSA Safety go up and down completely randomly.
Pair Corralation between Seven West and MSA Safety
Assuming the 90 days horizon Seven West Media is expected to generate 2.82 times more return on investment than MSA Safety. However, Seven West is 2.82 times more volatile than MSA Safety Incorporated. It trades about 0.1 of its potential returns per unit of risk. MSA Safety Incorporated is currently generating about -0.07 per unit of risk. If you would invest 7.80 in Seven West Media on November 1, 2024 and sell it today you would earn a total of 0.55 from holding Seven West Media or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Seven West Media vs. MSA Safety Incorporated
Performance |
| Timeline |
| Seven West Media |
| MSA Safety |
Seven West and MSA Safety Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and MSA Safety
The main advantage of trading using opposite Seven West and MSA Safety positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, MSA Safety 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 MSA Safety will offset losses from the drop in MSA Safety's long position.| Seven West vs. United Breweries Co | Seven West vs. The Boston Beer | Seven West vs. China Resources Beer | Seven West vs. THAI BEVERAGE |
| MSA Safety vs. Seven West Media | MSA Safety vs. RCS MediaGroup SpA | MSA Safety vs. S E BANKEN A | MSA Safety vs. Prosiebensat 1 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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