Correlation Between Mayfield Childcare and ARN Media

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

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

Diversification Opportunities for Mayfield Childcare and ARN Media

-0.31

Correlation Coefficient

Mayfield Childcare  ARN Media

Very good diversification

The 3 months correlation between Mayfield and ARN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Mayfield Childcare 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 Mayfield Childcare are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and ARN Media go up and down completely randomly.

Pair Corralation between Mayfield Childcare and ARN Media

Assuming the 90 days trading horizon Mayfield Childcare is expected to generate 0.69 times more return on investment than ARN Media. However, Mayfield Childcare is 1.44 times less risky than ARN Media. It trades about -0.03 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.05 per unit of risk. If you would invest  51.00  in Mayfield Childcare on September 23, 2024 and sell it today you would lose (2.00) from holding Mayfield Childcare or give up 3.92% of portfolio value over 90 days.

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

Mayfield Childcare  vs.  ARN Media Limited

Mayfield Childcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfield Childcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ARN Media Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ARN Media Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ARN Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mayfield Childcare and ARN Media

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

The idea behind Mayfield Childcare and ARN Media Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.