Correlation Between Mawer Equity and Mawer Canadien

Can any of the company-specific risk be diversified away by investing in both Mawer Equity and Mawer Canadien 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 Mawer Equity and Mawer Canadien into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mawer Equity A and Mawer Canadien obligations, you can compare the effects of market volatilities on Mawer Equity and Mawer Canadien 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 Mawer Equity with a short position of Mawer Canadien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mawer Equity and Mawer Canadien.

Diversification Opportunities for Mawer Equity and Mawer Canadien

-0.52

Correlation Coefficient

Mawer Equity  Mawer Canadien

Excellent diversification

The 3 months correlation between Mawer and Mawer is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mawer Equity A and Mawer Canadien obligations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mawer Canadien oblig and Mawer Equity 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 Mawer Equity A are associated (or correlated) with Mawer Canadien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mawer Canadien oblig has no effect on the direction of Mawer Equity i.e., Mawer Equity and Mawer Canadien go up and down completely randomly.

Pair Corralation between Mawer Equity and Mawer Canadien

Assuming the 90 days trading horizon Mawer Equity A is expected to generate 1.82 times more return on investment than Mawer Canadien. However, Mawer Equity is 1.82 times more volatile than Mawer Canadien obligations. It trades about 0.23 of its potential returns per unit of risk. Mawer Canadien obligations is currently generating about 0.05 per unit of risk. If you would invest  9,498  in Mawer Equity A on September 3, 2024 and sell it today you would earn a total of  893.00  from holding Mawer Equity A or generate 9.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Mawer Equity A  vs.  Mawer Canadien obligations

Mawer Equity A

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mawer Equity A are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Mawer Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mawer Canadien oblig

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mawer Canadien obligations are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Mawer Canadien is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mawer Equity and Mawer Canadien

The main advantage of trading using opposite Mawer Equity and Mawer Canadien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mawer Equity position performs unexpectedly, Mawer Canadien 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 Mawer Canadien will offset losses from the drop in Mawer Canadien's long position.

The idea behind Mawer Equity A and Mawer Canadien obligations 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.