Correlation Between MGP Ingredients and Top Shelf

Can any of the company-specific risk be diversified away by investing in both MGP Ingredients and Top Shelf 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 MGP Ingredients and Top Shelf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MGP Ingredients and Top Shelf Brands, you can compare the effects of market volatilities on MGP Ingredients and Top Shelf 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 MGP Ingredients with a short position of Top Shelf. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGP Ingredients and Top Shelf.

Diversification Opportunities for MGP Ingredients and Top Shelf

0.0

Correlation Coefficient

MGP Ingredients  Top Shelf

Pay attention - limited upside

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

Pair Corralation between MGP Ingredients and Top Shelf

If you would invest  0.01  in Top Shelf Brands on December 26, 2024 and sell it today you would lose  0.00  from holding Top Shelf Brands or give up 0.0% of portfolio value over 90 days.

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

MGP Ingredients  vs.  Top Shelf Brands

MGP Ingredients

Risk-Adjusted Performance

Very Weak

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Top Shelf Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Top Shelf Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Top Shelf is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MGP Ingredients and Top Shelf

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

The idea behind MGP Ingredients and Top Shelf Brands 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.