Correlation Between Mountain Crest and Diageo PLC

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

By analyzing existing cross correlation between Mountain Crest Acquisition and Diageo PLC ADR, you can compare the effects of market volatilities on Mountain Crest and Diageo PLC 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 Mountain Crest with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mountain Crest and Diageo PLC.

Diversification Opportunities for Mountain Crest and Diageo PLC

0.0

Correlation Coefficient

Mountain Crest  Diageo PLC

Pay attention - limited upside

The 3 months correlation between Mountain and Diageo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Crest Acquisition and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Mountain Crest 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 Mountain Crest Acquisition are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Mountain Crest i.e., Mountain Crest and Diageo PLC go up and down completely randomly.

Pair Corralation between Mountain Crest and Diageo PLC

If you would invest (100.00) in Mountain Crest Acquisition on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Mountain Crest Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mountain Crest Acquisition  vs.  Diageo PLC ADR

Mountain Crest Acqui

Risk-Adjusted Performance

Very Weak

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

Diageo PLC ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Mountain Crest and Diageo PLC

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

The idea behind Mountain Crest Acquisition and Diageo PLC ADR 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.