Correlation Between McGrath RentCorp and Freedom Internet

Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and Freedom Internet 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 McGrath RentCorp and Freedom Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McGrath RentCorp and Freedom Internet Group, you can compare the effects of market volatilities on McGrath RentCorp and Freedom Internet 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 McGrath RentCorp with a short position of Freedom Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Freedom Internet.

Diversification Opportunities for McGrath RentCorp and Freedom Internet

0.0

Correlation Coefficient

McGrath RentCorp  Freedom Internet

Pay attention - limited upside

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

Pair Corralation between McGrath RentCorp and Freedom Internet

If you would invest  11,224  in McGrath RentCorp on October 27, 2024 and sell it today you would earn a total of  1,042  from holding McGrath RentCorp or generate 9.28% return on investment over 90 days.

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

McGrath RentCorp  vs.  Freedom Internet Group

McGrath RentCorp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in McGrath RentCorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, McGrath RentCorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Freedom Internet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Internet Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Freedom Internet is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with McGrath RentCorp and Freedom Internet

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

The idea behind McGrath RentCorp and Freedom Internet Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.