Correlation Between Mitie Group and All American

Can any of the company-specific risk be diversified away by investing in both Mitie Group and All American 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 Mitie Group and All American into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mitie Group Plc and All American Pet, you can compare the effects of market volatilities on Mitie Group and All American 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 Mitie Group with a short position of All American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitie Group and All American.

Diversification Opportunities for Mitie Group and All American

0.1

Correlation Coefficient

Mitie Group  All American

Average diversification

The 3 months correlation between Mitie and All is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group Plc and All American Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Pet and Mitie Group 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 Mitie Group Plc are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Pet has no effect on the direction of Mitie Group i.e., Mitie Group and All American go up and down completely randomly.

Pair Corralation between Mitie Group and All American

Assuming the 90 days horizon Mitie Group is expected to generate 129.81 times less return on investment than All American. But when comparing it to its historical volatility, Mitie Group Plc is 135.8 times less risky than All American. It trades about 0.21 of its potential returns per unit of risk. All American Pet is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.01  in All American Pet on October 9, 2024 and sell it today you would earn a total of  0.00  from holding All American Pet or generate 0.0% return on investment over 90 days.

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

Mitie Group Plc  vs.  All American Pet

Mitie Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitie Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Mitie Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

All American Pet

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in All American Pet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, All American unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitie Group and All American

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

The idea behind Mitie Group Plc and All American Pet 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.