Correlation Between Mitie Group and ADM Endeavors

Can any of the company-specific risk be diversified away by investing in both Mitie Group and ADM Endeavors 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 ADM Endeavors 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 ADM Endeavors, you can compare the effects of market volatilities on Mitie Group and ADM Endeavors 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 ADM Endeavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitie Group and ADM Endeavors.

Diversification Opportunities for Mitie Group and ADM Endeavors

-0.02

Correlation Coefficient

Mitie Group  ADM Endeavors

Good diversification

The 3 months correlation between Mitie and ADM is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group Plc and ADM Endeavors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADM Endeavors 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 ADM Endeavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADM Endeavors has no effect on the direction of Mitie Group i.e., Mitie Group and ADM Endeavors go up and down completely randomly.

Pair Corralation between Mitie Group and ADM Endeavors

Assuming the 90 days horizon Mitie Group is expected to generate 1.3 times less return on investment than ADM Endeavors. But when comparing it to its historical volatility, Mitie Group Plc is 2.13 times less risky than ADM Endeavors. It trades about 0.03 of its potential returns per unit of risk. ADM Endeavors is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4.50  in ADM Endeavors on December 24, 2024 and sell it today you would lose (0.11) from holding ADM Endeavors or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Mitie Group Plc  vs.  ADM Endeavors

Mitie Group Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitie Group Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

ADM Endeavors

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ADM Endeavors are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, ADM Endeavors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mitie Group and ADM Endeavors

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

The idea behind Mitie Group Plc and ADM Endeavors 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.