Correlation Between Mayfair Gold and Dixons Carphone

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

By analyzing existing cross correlation between Mayfair Gold Corp and Dixons Carphone plc, you can compare the effects of market volatilities on Mayfair Gold and Dixons Carphone 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 Mayfair Gold with a short position of Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayfair Gold and Dixons Carphone.

Diversification Opportunities for Mayfair Gold and Dixons Carphone

-0.6

Correlation Coefficient

Mayfair Gold  Dixons Carphone

Excellent diversification

The 3 months correlation between Mayfair and Dixons is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mayfair Gold Corp and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc and Mayfair Gold 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 Mayfair Gold Corp are associated (or correlated) with Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Mayfair Gold i.e., Mayfair Gold and Dixons Carphone go up and down completely randomly.

Pair Corralation between Mayfair Gold and Dixons Carphone

Assuming the 90 days horizon Mayfair Gold is expected to generate 1.35 times less return on investment than Dixons Carphone. But when comparing it to its historical volatility, Mayfair Gold Corp is 1.24 times less risky than Dixons Carphone. It trades about 0.02 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  94.00  in Dixons Carphone plc on October 25, 2024 and sell it today you would earn a total of  19.00  from holding Dixons Carphone plc or generate 20.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

Mayfair Gold Corp  vs.  Dixons Carphone plc

Mayfair Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfair Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Dixons Carphone plc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dixons Carphone plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dixons Carphone is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mayfair Gold and Dixons Carphone

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

The idea behind Mayfair Gold Corp and Dixons Carphone plc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..