Correlation Between Evil Empire and MCBC Holdings

Can any of the company-specific risk be diversified away by investing in both Evil Empire and MCBC Holdings 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 Evil Empire and MCBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evil Empire Designs and MCBC Holdings, you can compare the effects of market volatilities on Evil Empire and MCBC Holdings 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 Evil Empire with a short position of MCBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evil Empire and MCBC Holdings.

Diversification Opportunities for Evil Empire and MCBC Holdings

0.67

Correlation Coefficient

Evil Empire  MCBC Holdings

Poor diversification

The 3 months correlation between Evil and MCBC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Evil Empire Designs and MCBC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCBC Holdings and Evil Empire 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 Evil Empire Designs are associated (or correlated) with MCBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCBC Holdings has no effect on the direction of Evil Empire i.e., Evil Empire and MCBC Holdings go up and down completely randomly.

Pair Corralation between Evil Empire and MCBC Holdings

Given the investment horizon of 90 days Evil Empire Designs is expected to generate 8.9 times more return on investment than MCBC Holdings. However, Evil Empire is 8.9 times more volatile than MCBC Holdings. It trades about 0.04 of its potential returns per unit of risk. MCBC Holdings is currently generating about -0.02 per unit of risk. If you would invest  5.00  in Evil Empire Designs on December 5, 2024 and sell it today you would lose (4.97) from holding Evil Empire Designs or give up 99.4% of portfolio value over 90 days.

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

Evil Empire Designs  vs.  MCBC Holdings

Evil Empire Designs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evil Empire Designs 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 quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

MCBC Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days MCBC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Evil Empire and MCBC Holdings

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

The idea behind Evil Empire Designs and MCBC Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.