Correlation Between PHN Multi and M Split

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

By analyzing existing cross correlation between PHN Multi Style All Cap and M Split Corp, you can compare the effects of market volatilities on PHN Multi and M Split 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 PHN Multi with a short position of M Split. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and M Split.

Diversification Opportunities for PHN Multi and M Split

0.34

Correlation Coefficient

PHN Multi  M Split

Weak diversification

The 3 months correlation between PHN and XMF-PB is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and M Split Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Split Corp and PHN Multi 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 PHN Multi Style All Cap are associated (or correlated) with M Split. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Split Corp has no effect on the direction of PHN Multi i.e., PHN Multi and M Split go up and down completely randomly.

Pair Corralation between PHN Multi and M Split

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to under-perform the M Split. In addition to that, PHN Multi is 2.51 times more volatile than M Split Corp. It trades about -0.25 of its total potential returns per unit of risk. M Split Corp is currently generating about 0.04 per unit of volatility. If you would invest  517.00  in M Split Corp on October 5, 2024 and sell it today you would earn a total of  4.00  from holding M Split Corp or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

PHN Multi Style All Cap  vs.  M Split Corp

PHN Multi Style

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHN Multi Style All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, PHN Multi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

M Split Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M Split Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, M Split is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PHN Multi and M Split

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

The idea behind PHN Multi Style All Cap and M Split Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.