Correlation Between Top Shelf and MGP Ingredients

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

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

Diversification Opportunities for Top Shelf and MGP Ingredients

0.0

Correlation Coefficient

Top Shelf  MGP Ingredients

Pay attention - limited upside

The 3 months correlation between Top and MGP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Top Shelf Brands and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients and Top Shelf 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 Top Shelf Brands 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 Top Shelf i.e., Top Shelf and MGP Ingredients go up and down completely randomly.

Pair Corralation between Top Shelf and MGP Ingredients

If you would invest  0.01  in Top Shelf Brands on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Top Shelf Brands or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Top Shelf Brands  vs.  MGP Ingredients

Top Shelf Brands

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Top Shelf and MGP Ingredients

The main advantage of trading using opposite Top Shelf and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Shelf 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 Top Shelf Brands 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.