Correlation Between Mayfield Childcare and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Mayfield Childcare and Peel Mining 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 Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayfield Childcare and Peel Mining, you can compare the effects of market volatilities on Mayfield Childcare and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayfield Childcare and Peel Mining.
Diversification Opportunities for Mayfield Childcare and Peel Mining
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mayfield and Peel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and Peel Mining go up and down completely randomly.
Pair Corralation between Mayfield Childcare and Peel Mining
Assuming the 90 days trading horizon Mayfield Childcare is expected to under-perform the Peel Mining. But the stock apears to be less risky and, when comparing its historical volatility, Mayfield Childcare is 2.27 times less risky than Peel Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Peel Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Peel Mining on September 20, 2024 and sell it today you would lose (1.00) from holding Peel Mining or give up 7.69% 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. Peel Mining
Performance |
Timeline |
Mayfield Childcare |
Peel Mining |
Mayfield Childcare and Peel Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mayfield Childcare and Peel Mining
The main advantage of trading using opposite Mayfield Childcare and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayfield Childcare position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.Mayfield Childcare vs. Macquarie Group | Mayfield Childcare vs. Rio Tinto | Mayfield Childcare vs. CSL | Mayfield Childcare vs. Commonwealth Bank of |
Peel Mining vs. Northern Star Resources | Peel Mining vs. Evolution Mining | Peel Mining vs. Bluescope Steel | Peel Mining vs. Sandfire Resources NL |
Check out your portfolio center.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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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