Correlation Between CIA ENGER and MARKET VECTR

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

By analyzing existing cross correlation between CIA ENGER ADR and MARKET VECTR RETAIL, you can compare the effects of market volatilities on CIA ENGER and MARKET VECTR 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 CIA ENGER with a short position of MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIA ENGER and MARKET VECTR.

Diversification Opportunities for CIA ENGER and MARKET VECTR

0.72

Correlation Coefficient

CIA ENGER  MARKET VECTR

Poor diversification

The 3 months correlation between CIA and MARKET is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CIA ENGER ADR and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL and CIA ENGER 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 CIA ENGER ADR are associated (or correlated) with MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of CIA ENGER i.e., CIA ENGER and MARKET VECTR go up and down completely randomly.

Pair Corralation between CIA ENGER and MARKET VECTR

Assuming the 90 days trading horizon CIA ENGER is expected to generate 2.22 times less return on investment than MARKET VECTR. But when comparing it to its historical volatility, CIA ENGER ADR is 1.7 times less risky than MARKET VECTR. It trades about 0.26 of its potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  21,695  in MARKET VECTR RETAIL on October 22, 2024 and sell it today you would earn a total of  735.00  from holding MARKET VECTR RETAIL or generate 3.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

CIA ENGER ADR  vs.  MARKET VECTR RETAIL

CIA ENGER ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CIA ENGER ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, CIA ENGER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MARKET VECTR RETAIL

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, MARKET VECTR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CIA ENGER and MARKET VECTR

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

The idea behind CIA ENGER ADR and MARKET VECTR RETAIL 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.