Correlation Between Mawer Global and EcoSynthetix

Can any of the company-specific risk be diversified away by investing in both Mawer Global and EcoSynthetix 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 EcoSynthetix 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 EcoSynthetix, you can compare the effects of market volatilities on Mawer Global and EcoSynthetix 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 EcoSynthetix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mawer Global and EcoSynthetix.

Diversification Opportunities for Mawer Global and EcoSynthetix

0.22

Correlation Coefficient

Mawer Global  EcoSynthetix

Modest diversification

The 3 months correlation between Mawer and EcoSynthetix is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mawer Global Small and EcoSynthetix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoSynthetix 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 EcoSynthetix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoSynthetix has no effect on the direction of Mawer Global i.e., Mawer Global and EcoSynthetix go up and down completely randomly.

Pair Corralation between Mawer Global and EcoSynthetix

Assuming the 90 days trading horizon Mawer Global Small is expected to generate 0.37 times more return on investment than EcoSynthetix. However, Mawer Global Small is 2.69 times less risky than EcoSynthetix. It trades about 0.08 of its potential returns per unit of risk. EcoSynthetix is currently generating about 0.02 per unit of risk. If you would invest  1,531  in Mawer Global Small on October 22, 2024 and sell it today you would earn a total of  16.00  from holding Mawer Global Small or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Mawer Global Small  vs.  EcoSynthetix

Mawer Global Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mawer Global Small has generated negative risk-adjusted returns adding no value to fund investors. 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.

EcoSynthetix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoSynthetix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EcoSynthetix is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mawer Global and EcoSynthetix

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

The idea behind Mawer Global Small and EcoSynthetix 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.