Correlation Between AMCON Distributing and MCF Energy

Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and MCF Energy 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 AMCON Distributing and MCF Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AMCON Distributing and MCF Energy, you can compare the effects of market volatilities on AMCON Distributing and MCF Energy 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 AMCON Distributing with a short position of MCF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and MCF Energy.

Diversification Opportunities for AMCON Distributing and MCF Energy

0.12

Correlation Coefficient

AMCON Distributing  MCF Energy

Average diversification

The 3 months correlation between AMCON and MCF is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and MCF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCF Energy and AMCON Distributing 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 AMCON Distributing are associated (or correlated) with MCF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCF Energy has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and MCF Energy go up and down completely randomly.

Pair Corralation between AMCON Distributing and MCF Energy

Considering the 90-day investment horizon AMCON Distributing is expected to generate 0.4 times more return on investment than MCF Energy. However, AMCON Distributing is 2.51 times less risky than MCF Energy. It trades about 0.17 of its potential returns per unit of risk. MCF Energy is currently generating about -0.27 per unit of risk. If you would invest  12,100  in AMCON Distributing on September 13, 2024 and sell it today you would earn a total of  1,800  from holding AMCON Distributing or generate 14.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AMCON Distributing  vs.  MCF Energy

AMCON Distributing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, AMCON Distributing is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

MCF Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AMCON Distributing and MCF Energy

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

The idea behind AMCON Distributing and MCF Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.