Correlation Between MFC Industrial and SVI Public

Can any of the company-specific risk be diversified away by investing in both MFC Industrial and SVI Public 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 MFC Industrial and SVI Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MFC Industrial Real and SVI Public, you can compare the effects of market volatilities on MFC Industrial and SVI Public 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 MFC Industrial with a short position of SVI Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and SVI Public.

Diversification Opportunities for MFC Industrial and SVI Public

-0.33

Correlation Coefficient

MFC Industrial  SVI Public

Very good diversification

The 3 months correlation between MFC and SVI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Real and SVI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVI Public and MFC Industrial 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 MFC Industrial Real are associated (or correlated) with SVI Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVI Public has no effect on the direction of MFC Industrial i.e., MFC Industrial and SVI Public go up and down completely randomly.

Pair Corralation between MFC Industrial and SVI Public

Assuming the 90 days trading horizon MFC Industrial Real is expected to generate 2.16 times more return on investment than SVI Public. However, MFC Industrial is 2.16 times more volatile than SVI Public. It trades about 0.07 of its potential returns per unit of risk. SVI Public is currently generating about 0.03 per unit of risk. If you would invest  31.00  in MFC Industrial Real on December 27, 2024 and sell it today you would earn a total of  5.00  from holding MFC Industrial Real or generate 16.13% return on investment over 90 days.

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

MFC Industrial Real  vs.  SVI Public

MFC Industrial Real

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Industrial Real are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MFC Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

SVI Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SVI Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, SVI Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MFC Industrial and SVI Public

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

The idea behind MFC Industrial Real and SVI 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.