Correlation Between Captiva Verde and Mallinckrodt Plc

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

By analyzing existing cross correlation between Captiva Verde Land and Mallinckrodt Plc, you can compare the effects of market volatilities on Captiva Verde and Mallinckrodt Plc 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 Captiva Verde with a short position of Mallinckrodt Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Captiva Verde and Mallinckrodt Plc.

Diversification Opportunities for Captiva Verde and Mallinckrodt Plc

0.59

Correlation Coefficient

Captiva Verde  Mallinckrodt Plc

Very weak diversification

The 3 months correlation between Captiva and Mallinckrodt is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Captiva Verde Land and Mallinckrodt Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mallinckrodt Plc and Captiva Verde 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 Captiva Verde Land are associated (or correlated) with Mallinckrodt Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mallinckrodt Plc has no effect on the direction of Captiva Verde i.e., Captiva Verde and Mallinckrodt Plc go up and down completely randomly.

Pair Corralation between Captiva Verde and Mallinckrodt Plc

If you would invest  2.10  in Captiva Verde Land on September 18, 2024 and sell it today you would lose (1.60) from holding Captiva Verde Land or give up 76.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Captiva Verde Land  vs.  Mallinckrodt Plc

Captiva Verde Land

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Captiva Verde Land are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Captiva Verde reported solid returns over the last few months and may actually be approaching a breakup point.

Mallinckrodt Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mallinckrodt Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mallinckrodt Plc is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Captiva Verde and Mallinckrodt Plc

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

The idea behind Captiva Verde Land and Mallinckrodt Plc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.