Correlation Between Major Drilling and StandardAero,

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

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

Diversification Opportunities for Major Drilling and StandardAero,

0.5

Correlation Coefficient

Major Drilling  StandardAero,

Very weak diversification

The 3 months correlation between Major and StandardAero, is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and StandardAero, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StandardAero, and Major Drilling 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 Major Drilling Group are associated (or correlated) with StandardAero,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StandardAero, has no effect on the direction of Major Drilling i.e., Major Drilling and StandardAero, go up and down completely randomly.

Pair Corralation between Major Drilling and StandardAero,

Assuming the 90 days horizon Major Drilling Group is expected to generate 0.57 times more return on investment than StandardAero,. However, Major Drilling Group is 1.74 times less risky than StandardAero,. It trades about -0.35 of its potential returns per unit of risk. StandardAero, is currently generating about -0.32 per unit of risk. If you would invest  620.00  in Major Drilling Group on October 9, 2024 and sell it today you would lose (49.00) from holding Major Drilling Group or give up 7.9% of portfolio value over 90 days.

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

Major Drilling Group  vs.  StandardAero,

Major Drilling Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

StandardAero,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StandardAero, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Major Drilling and StandardAero,

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

The idea behind Major Drilling Group and StandardAero, 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.