Correlation Between Interfor Corp and Martinrea International

Can any of the company-specific risk be diversified away by investing in both Interfor Corp and Martinrea International 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 Interfor Corp and Martinrea International into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Interfor Corp and Martinrea International

-0.06

Correlation Coefficient

Interfor Corp  Martinrea International

Good diversification

The 3 months correlation between Interfor and Martinrea is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Interfor Corp and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International and Interfor Corp 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 Interfor Corp are associated (or correlated) with Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Interfor Corp i.e., Interfor Corp and Martinrea International go up and down completely randomly.

Pair Corralation between Interfor Corp and Martinrea International

Assuming the 90 days trading horizon Interfor Corp is expected to generate 1.13 times more return on investment than Martinrea International. However, Interfor Corp is 1.13 times more volatile than Martinrea International. It trades about 0.15 of its potential returns per unit of risk. Martinrea International is currently generating about -0.06 per unit of risk. If you would invest  1,636  in Interfor Corp on September 3, 2024 and sell it today you would earn a total of  404.00  from holding Interfor Corp or generate 24.69% return on investment over 90 days.

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

Interfor Corp  vs.  Martinrea International

Interfor Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interfor Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Interfor Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Martinrea International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martinrea International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Interfor Corp and Martinrea International

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

The idea behind Interfor Corp and Martinrea International 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.