Correlation Between MGP Ingredients and ANDREW PELLER

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

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

Diversification Opportunities for MGP Ingredients and ANDREW PELLER

0.18

Correlation Coefficient

MGP Ingredients  ANDREW PELLER

Average diversification

The 3 months correlation between MGP and ANDREW is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding MGP Ingredients and ANDREW PELLER LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANDREW PELLER LTD and MGP Ingredients 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 MGP Ingredients are associated (or correlated) with ANDREW PELLER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANDREW PELLER LTD has no effect on the direction of MGP Ingredients i.e., MGP Ingredients and ANDREW PELLER go up and down completely randomly.

Pair Corralation between MGP Ingredients and ANDREW PELLER

Assuming the 90 days trading horizon MGP Ingredients is expected to under-perform the ANDREW PELLER. In addition to that, MGP Ingredients is 1.5 times more volatile than ANDREW PELLER LTD. It trades about -0.16 of its total potential returns per unit of risk. ANDREW PELLER LTD is currently generating about -0.08 per unit of volatility. If you would invest  284.00  in ANDREW PELLER LTD on September 23, 2024 and sell it today you would lose (24.00) from holding ANDREW PELLER LTD or give up 8.45% of portfolio value over 90 days.

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

MGP Ingredients  vs.  ANDREW PELLER LTD

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ANDREW PELLER LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANDREW PELLER LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ANDREW PELLER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MGP Ingredients and ANDREW PELLER

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

The idea behind MGP Ingredients and ANDREW PELLER LTD 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.