Correlation Between Federal Mogul and Migros Ticaret

Can any of the company-specific risk be diversified away by investing in both Federal Mogul and Migros Ticaret 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 Federal Mogul and Migros Ticaret into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federal Mogul Izmit and Migros Ticaret AS, you can compare the effects of market volatilities on Federal Mogul and Migros Ticaret 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 Federal Mogul with a short position of Migros Ticaret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Mogul and Migros Ticaret.

Diversification Opportunities for Federal Mogul and Migros Ticaret

-0.6

Correlation Coefficient

Federal Mogul  Migros Ticaret

Excellent diversification

The 3 months correlation between Federal and Migros is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Federal Mogul Izmit and Migros Ticaret AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migros Ticaret AS and Federal Mogul 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 Federal Mogul Izmit are associated (or correlated) with Migros Ticaret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migros Ticaret AS has no effect on the direction of Federal Mogul i.e., Federal Mogul and Migros Ticaret go up and down completely randomly.

Pair Corralation between Federal Mogul and Migros Ticaret

Assuming the 90 days trading horizon Federal Mogul Izmit is expected to generate 1.05 times more return on investment than Migros Ticaret. However, Federal Mogul is 1.05 times more volatile than Migros Ticaret AS. It trades about 0.0 of its potential returns per unit of risk. Migros Ticaret AS is currently generating about -0.04 per unit of risk. If you would invest  31,502  in Federal Mogul Izmit on December 29, 2024 and sell it today you would lose (952.00) from holding Federal Mogul Izmit or give up 3.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Federal Mogul Izmit  vs.  Migros Ticaret AS

Federal Mogul Izmit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Mogul Izmit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Federal Mogul is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Migros Ticaret AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Migros Ticaret AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Migros Ticaret is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Federal Mogul and Migros Ticaret

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

The idea behind Federal Mogul Izmit and Migros Ticaret AS 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 Managers module to screen money managers from public funds and ETFs managed around the world.