Correlation Between Mitie Group and Dexterra

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

Diversification Opportunities for Mitie Group and Dexterra

0.47

Correlation Coefficient

Mitie Group  Dexterra

Very weak diversification

The 3 months correlation between Mitie and Dexterra is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group Plc and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group 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 Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Mitie Group i.e., Mitie Group and Dexterra go up and down completely randomly.

Pair Corralation between Mitie Group and Dexterra

Assuming the 90 days horizon Mitie Group Plc is expected to generate 0.95 times more return on investment than Dexterra. However, Mitie Group Plc is 1.05 times less risky than Dexterra. It trades about 0.08 of its potential returns per unit of risk. Dexterra Group is currently generating about 0.0 per unit of risk. If you would invest  554.00  in Mitie Group Plc on December 29, 2024 and sell it today you would earn a total of  61.00  from holding Mitie Group Plc or generate 11.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Mitie Group Plc  vs.  Dexterra Group

Mitie Group Plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitie Group Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mitie Group showed solid returns over the last few months and may actually be approaching a breakup point.

Dexterra Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dexterra Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dexterra is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitie Group and Dexterra

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

The idea behind Mitie Group Plc and Dexterra 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.