Correlation Between MFC Industrial and Ally Leasehold

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

By analyzing existing cross correlation between MFC Industrial Investment and Ally Leasehold Real, you can compare the effects of market volatilities on MFC Industrial and Ally Leasehold 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 MFC Industrial with a short position of Ally Leasehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and Ally Leasehold.

Diversification Opportunities for MFC Industrial and Ally Leasehold

0.64

Correlation Coefficient

MFC Industrial  Ally Leasehold

Poor diversification

The 3 months correlation between MFC and Ally is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Investment and Ally Leasehold Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Leasehold Real and MFC Industrial 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 MFC Industrial Investment are associated (or correlated) with Ally Leasehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Leasehold Real has no effect on the direction of MFC Industrial i.e., MFC Industrial and Ally Leasehold go up and down completely randomly.

Pair Corralation between MFC Industrial and Ally Leasehold

Assuming the 90 days trading horizon MFC Industrial Investment is expected to generate 0.99 times more return on investment than Ally Leasehold. However, MFC Industrial Investment is 1.01 times less risky than Ally Leasehold. It trades about 0.27 of its potential returns per unit of risk. Ally Leasehold Real is currently generating about 0.11 per unit of risk. If you would invest  597.00  in MFC Industrial Investment on September 3, 2024 and sell it today you would earn a total of  38.00  from holding MFC Industrial Investment or generate 6.37% return on investment over 90 days.

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

MFC Industrial Investment  vs.  Ally Leasehold Real

MFC Industrial Investment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Industrial Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MFC Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ally Leasehold Real

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Leasehold Real are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Ally Leasehold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MFC Industrial and Ally Leasehold

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

The idea behind MFC Industrial Investment and Ally Leasehold Real 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.