Correlation Between Mawer Global and Edgepoint Global

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

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

Diversification Opportunities for Mawer Global and Edgepoint Global

0.8

Correlation Coefficient

Mawer Global  Edgepoint Global

Very poor diversification

The 3 months correlation between Mawer and Edgepoint is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mawer Global Small and Edgepoint Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgepoint Global Growth and Mawer Global 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 Global Small are associated (or correlated) with Edgepoint Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgepoint Global Growth has no effect on the direction of Mawer Global i.e., Mawer Global and Edgepoint Global go up and down completely randomly.

Pair Corralation between Mawer Global and Edgepoint Global

Assuming the 90 days trading horizon Mawer Global Small is expected to generate 1.88 times more return on investment than Edgepoint Global. However, Mawer Global is 1.88 times more volatile than Edgepoint Global Growth. It trades about 0.12 of its potential returns per unit of risk. Edgepoint Global Growth is currently generating about 0.09 per unit of risk. If you would invest  1,533  in Mawer Global Small on December 28, 2024 and sell it today you would earn a total of  87.00  from holding Mawer Global Small or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Mawer Global Small  vs.  Edgepoint Global Growth

Mawer Global Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mawer Global Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Mawer Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Edgepoint Global Growth

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edgepoint Global Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady forward-looking indicators, Edgepoint Global is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Mawer Global and Edgepoint Global

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

The idea behind Mawer Global Small and Edgepoint Global Growth 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.