Correlation Between IRSA Inversiones and MGP Ingredients

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

By analyzing existing cross correlation between IRSA Inversiones Y and MGP Ingredients, you can compare the effects of market volatilities on IRSA Inversiones and MGP Ingredients 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 IRSA Inversiones with a short position of MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of IRSA Inversiones and MGP Ingredients.

Diversification Opportunities for IRSA Inversiones and MGP Ingredients

-0.81

Correlation Coefficient

IRSA Inversiones  MGP Ingredients

Pay attention - limited upside

The 3 months correlation between IRSA and MGP is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding IRSA Inversiones Y and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients and IRSA Inversiones 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 IRSA Inversiones Y are associated (or correlated) with MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of IRSA Inversiones i.e., IRSA Inversiones and MGP Ingredients go up and down completely randomly.

Pair Corralation between IRSA Inversiones and MGP Ingredients

Considering the 90-day investment horizon IRSA Inversiones Y is expected to generate 1.3 times more return on investment than MGP Ingredients. However, IRSA Inversiones is 1.3 times more volatile than MGP Ingredients. It trades about 0.1 of its potential returns per unit of risk. MGP Ingredients is currently generating about -0.06 per unit of risk. If you would invest  390.00  in IRSA Inversiones Y on October 4, 2024 and sell it today you would earn a total of  1,203  from holding IRSA Inversiones Y or generate 308.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.0%
Values	Daily Returns

IRSA Inversiones Y  vs.  MGP Ingredients

IRSA Inversiones Y

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IRSA Inversiones Y are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, IRSA Inversiones unveiled solid returns over the last few months and may actually be approaching a breakup point.

MGP Ingredients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGP Ingredients 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with IRSA Inversiones and MGP Ingredients

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

The idea behind IRSA Inversiones Y and MGP Ingredients 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.