Correlation Between MFEC PCL and NForce Secure

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

By analyzing existing cross correlation between MFEC PCL and nForce Secure Public, you can compare the effects of market volatilities on MFEC PCL and NForce Secure 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 MFEC PCL with a short position of NForce Secure. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFEC PCL and NForce Secure.

Diversification Opportunities for MFEC PCL and NForce Secure

-0.38

Correlation Coefficient

MFEC PCL  NForce Secure

Very good diversification

The 3 months correlation between MFEC and NForce is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding MFEC PCL and nForce Secure Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nForce Secure Public and MFEC PCL 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 MFEC PCL are associated (or correlated) with NForce Secure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nForce Secure Public has no effect on the direction of MFEC PCL i.e., MFEC PCL and NForce Secure go up and down completely randomly.

Pair Corralation between MFEC PCL and NForce Secure

Assuming the 90 days trading horizon MFEC PCL is expected to generate 16.82 times more return on investment than NForce Secure. However, MFEC PCL is 16.82 times more volatile than nForce Secure Public. It trades about 0.04 of its potential returns per unit of risk. nForce Secure Public is currently generating about 0.01 per unit of risk. If you would invest  708.00  in MFEC PCL on September 24, 2024 and sell it today you would lose (123.00) from holding MFEC PCL or give up 17.37% of portfolio value over 90 days.

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

MFEC PCL  vs.  nForce Secure Public

MFEC PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFEC PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, MFEC PCL is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

nForce Secure Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days nForce Secure Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MFEC PCL and NForce Secure

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

The idea behind MFEC PCL and nForce Secure Public 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.