Correlation Between Mount Gibson and Experian Plc

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

By analyzing existing cross correlation between Mount Gibson Iron and Experian plc, you can compare the effects of market volatilities on Mount Gibson and Experian 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 Mount Gibson with a short position of Experian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Experian Plc.

Diversification Opportunities for Mount Gibson and Experian Plc

0.58

Correlation Coefficient

Mount Gibson  Experian Plc

Very weak diversification

The 3 months correlation between Mount and Experian is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Experian plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Experian plc and Mount Gibson 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 Mount Gibson Iron are associated (or correlated) with Experian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Experian plc has no effect on the direction of Mount Gibson i.e., Mount Gibson and Experian Plc go up and down completely randomly.

Pair Corralation between Mount Gibson and Experian Plc

Assuming the 90 days horizon Mount Gibson Iron is expected to under-perform the Experian Plc. In addition to that, Mount Gibson is 3.22 times more volatile than Experian plc. It trades about -0.1 of its total potential returns per unit of risk. Experian plc is currently generating about -0.3 per unit of volatility. If you would invest  4,460  in Experian plc on October 10, 2024 and sell it today you would lose (220.00) from holding Experian plc or give up 4.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Mount Gibson Iron  vs.  Experian plc

Mount Gibson Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Gibson Iron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Experian plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mount Gibson and Experian Plc

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

The idea behind Mount Gibson Iron and Experian 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.