Correlation Between X Trade and MCI Management
Can any of the company-specific risk be diversified away by investing in both X Trade and MCI Management 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 X Trade and MCI Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Trade Brokers and MCI Management SA, you can compare the effects of market volatilities on X Trade and MCI Management 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 X Trade with a short position of MCI Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Trade and MCI Management.
Diversification Opportunities for X Trade and MCI Management
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XTB and MCI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding X Trade Brokers and MCI Management SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCI Management SA and X Trade 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 X Trade Brokers are associated (or correlated) with MCI Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCI Management SA has no effect on the direction of X Trade i.e., X Trade and MCI Management go up and down completely randomly.
Pair Corralation between X Trade and MCI Management
Assuming the 90 days trading horizon X Trade Brokers is expected to generate 1.68 times more return on investment than MCI Management. However, X Trade is 1.68 times more volatile than MCI Management SA. It trades about 0.14 of its potential returns per unit of risk. MCI Management SA is currently generating about -0.03 per unit of risk. If you would invest 6,672 in X Trade Brokers on August 25, 2024 and sell it today you would earn a total of 324.00 from holding X Trade Brokers or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Trade Brokers vs. MCI Management SA
Performance |
| Timeline |
| X Trade Brokers |
| MCI Management SA |
X Trade and MCI Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Trade and MCI Management
The main advantage of trading using opposite X Trade and MCI Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Trade position performs unexpectedly, MCI Management 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 MCI Management will offset losses from the drop in MCI Management's long position.The idea behind X Trade Brokers and MCI Management SA 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.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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