Correlation Between Mene and Birks

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

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

Diversification Opportunities for Mene and Birks

-0.58

Correlation Coefficient

Mene  Birks

Excellent diversification

The 3 months correlation between Mene and Birks is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mene Inc and Birks Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Birks Group and Mene 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 Mene Inc are associated (or correlated) with Birks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Birks Group has no effect on the direction of Mene i.e., Mene and Birks go up and down completely randomly.

Pair Corralation between Mene and Birks

Assuming the 90 days horizon Mene Inc is expected to generate 1.5 times more return on investment than Birks. However, Mene is 1.5 times more volatile than Birks Group. It trades about 0.09 of its potential returns per unit of risk. Birks Group is currently generating about -0.07 per unit of risk. If you would invest  7.50  in Mene Inc on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Mene Inc or generate 26.67% return on investment over 90 days.

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

Mene Inc  vs.  Birks Group

Mene Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mene Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Mene reported solid returns over the last few months and may actually be approaching a breakup point.

Birks Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Birks Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Mene and Birks

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

The idea behind Mene Inc and Birks Group 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.