Correlation Between Workday and MF International
Can any of the company-specific risk be diversified away by investing in both Workday and MF International 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 Workday and MF International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workday and mF International Limited, you can compare the effects of market volatilities on Workday and MF International 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 Workday with a short position of MF International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workday and MF International.
Diversification Opportunities for Workday and MF International
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Workday and MFI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Workday and mF International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mF International and Workday 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 Workday are associated (or correlated) with MF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mF International has no effect on the direction of Workday i.e., Workday and MF International go up and down completely randomly.
Pair Corralation between Workday and MF International
Given the investment horizon of 90 days Workday is expected to generate 0.25 times more return on investment than MF International. However, Workday is 4.04 times less risky than MF International. It trades about 0.08 of its potential returns per unit of risk. mF International Limited is currently generating about 0.02 per unit of risk. If you would invest 21,083 in Workday on September 1, 2024 and sell it today you would earn a total of 3,916 from holding Workday or generate 18.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workday vs. mF International Limited
Performance |
| Timeline |
| Workday |
| mF International |
Workday and MF International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workday and MF International
The main advantage of trading using opposite Workday and MF International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday position performs unexpectedly, MF International 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 MF International will offset losses from the drop in MF International's long position.The idea behind Workday and mF International Limited 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.| MF International vs. Nexstar Broadcasting Group | MF International vs. Sun Country Airlines | MF International vs. Sandstorm Gold Ltd | MF International vs. Afya |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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