Correlation Between MDJM and Howard Hughes

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

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

Diversification Opportunities for MDJM and Howard Hughes

0.28

Correlation Coefficient

MDJM  Howard Hughes

Modest diversification

The 3 months correlation between MDJM and Howard is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MDJM and Howard Hughes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howard Hughes and MDJM 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 MDJM are associated (or correlated) with Howard Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howard Hughes has no effect on the direction of MDJM i.e., MDJM and Howard Hughes go up and down completely randomly.

Pair Corralation between MDJM and Howard Hughes

Given the investment horizon of 90 days MDJM is expected to generate 7.49 times more return on investment than Howard Hughes. However, MDJM is 7.49 times more volatile than Howard Hughes. It trades about 0.05 of its potential returns per unit of risk. Howard Hughes is currently generating about 0.05 per unit of risk. If you would invest  26.00  in MDJM on December 2, 2024 and sell it today you would lose (2.00) from holding MDJM or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.0%
Values	Daily Returns

MDJM  vs.  Howard Hughes

MDJM

Risk-Adjusted Performance

OK

Over the last 90 days MDJM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating forward-looking indicators, MDJM demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Howard Hughes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Howard Hughes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with MDJM and Howard Hughes

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

The idea behind MDJM and Howard Hughes 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.