Correlation Between Kip McGrath and Metals X

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

By analyzing existing cross correlation between Kip McGrath Education and Metals X, you can compare the effects of market volatilities on Kip McGrath and Metals X 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 Kip McGrath with a short position of Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kip McGrath and Metals X.

Diversification Opportunities for Kip McGrath and Metals X

-0.21

Correlation Coefficient

Kip McGrath  Metals X

Very good diversification

The 3 months correlation between Kip and Metals is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kip McGrath Education and Metals X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X and Kip McGrath 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 Kip McGrath Education are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X has no effect on the direction of Kip McGrath i.e., Kip McGrath and Metals X go up and down completely randomly.

Pair Corralation between Kip McGrath and Metals X

Assuming the 90 days trading horizon Kip McGrath Education is expected to under-perform the Metals X. But the stock apears to be less risky and, when comparing its historical volatility, Kip McGrath Education is 2.11 times less risky than Metals X. The stock trades about -0.01 of its potential returns per unit of risk. The Metals X is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Metals X on December 20, 2024 and sell it today you would earn a total of  25.00  from holding Metals X or generate 60.98% return on investment over 90 days.

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

Kip McGrath Education  vs.  Metals X

Kip McGrath Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kip McGrath Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kip McGrath is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Metals X

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Metals X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kip McGrath and Metals X

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

The idea behind Kip McGrath Education and Metals X 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .