Correlation Between Investment and Mulberry Group

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

By analyzing existing cross correlation between The Investment and Mulberry Group PLC, you can compare the effects of market volatilities on Investment and Mulberry Group 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 Investment with a short position of Mulberry Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Mulberry Group.

Diversification Opportunities for Investment and Mulberry Group

-0.49

Correlation Coefficient

Investment  Mulberry Group

Very good diversification

The 3 months correlation between Investment and Mulberry is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Investment and Mulberry Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mulberry Group PLC and Investment 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 The Investment are associated (or correlated) with Mulberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mulberry Group PLC has no effect on the direction of Investment i.e., Investment and Mulberry Group go up and down completely randomly.

Pair Corralation between Investment and Mulberry Group

Assuming the 90 days trading horizon The Investment is expected to generate 0.12 times more return on investment than Mulberry Group. However, The Investment is 8.44 times less risky than Mulberry Group. It trades about 0.03 of its potential returns per unit of risk. Mulberry Group PLC is currently generating about -0.01 per unit of risk. If you would invest  37,000  in The Investment on October 7, 2024 and sell it today you would earn a total of  300.00  from holding The Investment or generate 0.81% return on investment over 90 days.

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

The Investment  vs.  Mulberry Group PLC

Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mulberry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mulberry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mulberry Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Investment and Mulberry Group

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

The idea behind The Investment and Mulberry Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.