Correlation Between Matco Foods and Invest Capital

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

By analyzing existing cross correlation between Matco Foods and Invest Capital Investment, you can compare the effects of market volatilities on Matco Foods and Invest Capital 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 Matco Foods with a short position of Invest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Invest Capital.

Diversification Opportunities for Matco Foods and Invest Capital

0.0

Correlation Coefficient

Matco Foods  Invest Capital

Pay attention - limited upside

The 3 months correlation between Matco and Invest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Invest Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invest Capital Investment and Matco Foods 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 Matco Foods are associated (or correlated) with Invest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invest Capital Investment has no effect on the direction of Matco Foods i.e., Matco Foods and Invest Capital go up and down completely randomly.

Pair Corralation between Matco Foods and Invest Capital

Assuming the 90 days trading horizon Matco Foods is expected to generate 1.05 times more return on investment than Invest Capital. However, Matco Foods is 1.05 times more volatile than Invest Capital Investment. It trades about 0.27 of its potential returns per unit of risk. Invest Capital Investment is currently generating about 0.03 per unit of risk. If you would invest  2,370  in Matco Foods on October 25, 2024 and sell it today you would earn a total of  2,192  from holding Matco Foods or generate 92.49% return on investment over 90 days.

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

Matco Foods  vs.  Invest Capital Investment

Matco Foods

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Matco Foods are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Matco Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Invest Capital Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invest Capital Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Invest Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Matco Foods and Invest Capital

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

The idea behind Matco Foods and Invest Capital Investment 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 Stocks Directory module to find actively traded stocks across global markets.