Correlation Between DevEx Resources and MGP Ingredients

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

By analyzing existing cross correlation between DevEx Resources Limited and MGP Ingredients, you can compare the effects of market volatilities on DevEx Resources and MGP Ingredients 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 DevEx Resources with a short position of MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of DevEx Resources and MGP Ingredients.

Diversification Opportunities for DevEx Resources and MGP Ingredients

0.0

Correlation Coefficient

DevEx Resources  MGP Ingredients

Pay attention - limited upside

The 3 months correlation between DevEx and MGP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DevEx Resources Limited and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients and DevEx Resources 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 DevEx Resources Limited are associated (or correlated) with MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of DevEx Resources i.e., DevEx Resources and MGP Ingredients go up and down completely randomly.

Pair Corralation between DevEx Resources and MGP Ingredients

If you would invest (100.00) in MGP Ingredients on October 23, 2024 and sell it today you would earn a total of  100.00  from holding MGP Ingredients or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

DevEx Resources Limited  vs.  MGP Ingredients

DevEx Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DevEx Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MGP Ingredients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MGP Ingredients is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with DevEx Resources and MGP Ingredients

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

The idea behind DevEx Resources Limited and MGP Ingredients 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.