Correlation Between Mitek Systems and Melrose Industries
Can any of the company-specific risk be diversified away by investing in both Mitek Systems and Melrose Industries 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 Mitek Systems and Melrose Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitek Systems and Melrose Industries PLC, you can compare the effects of market volatilities on Mitek Systems and Melrose Industries 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 Mitek Systems with a short position of Melrose Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitek Systems and Melrose Industries.
Diversification Opportunities for Mitek Systems and Melrose Industries
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mitek and Melrose is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mitek Systems and Melrose Industries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melrose Industries PLC and Mitek Systems 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 Mitek Systems are associated (or correlated) with Melrose Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melrose Industries PLC has no effect on the direction of Mitek Systems i.e., Mitek Systems and Melrose Industries go up and down completely randomly.
Pair Corralation between Mitek Systems and Melrose Industries
Given the investment horizon of 90 days Mitek Systems is expected to generate 1.48 times less return on investment than Melrose Industries. But when comparing it to its historical volatility, Mitek Systems is 1.43 times less risky than Melrose Industries. It trades about 0.11 of its potential returns per unit of risk. Melrose Industries PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 587.00 in Melrose Industries PLC on October 31, 2024 and sell it today you would earn a total of 155.00 from holding Melrose Industries PLC or generate 26.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Mitek Systems vs. Melrose Industries PLC
Performance |
Timeline |
Mitek Systems |
Melrose Industries PLC |
Mitek Systems and Melrose Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mitek Systems and Melrose Industries
The main advantage of trading using opposite Mitek Systems and Melrose Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitek Systems position performs unexpectedly, Melrose Industries 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 Melrose Industries will offset losses from the drop in Melrose Industries' long position.Mitek Systems vs. Wag Group Co | ||
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Check out your portfolio center.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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