Correlation Between Merchants National and Howard Hughes

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

By analyzing existing cross correlation between Merchants National Properties and The Howard Hughes, you can compare the effects of market volatilities on Merchants National and Howard Hughes 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 Merchants National with a short position of Howard Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merchants National and Howard Hughes.

Diversification Opportunities for Merchants National and Howard Hughes

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Correlation Coefficient

Merchants National  Howard Hughes

Pay attention - limited upside

The 3 months correlation between Merchants and Howard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merchants National Properties and The Howard Hughes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howard Hughes and Merchants National 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 Merchants National Properties are associated (or correlated) with Howard Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howard Hughes has no effect on the direction of Merchants National i.e., Merchants National and Howard Hughes go up and down completely randomly.

Pair Corralation between Merchants National and Howard Hughes

If you would invest  173,500  in Merchants National Properties on December 20, 2024 and sell it today you would earn a total of  7,500  from holding Merchants National Properties or generate 4.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Merchants National Properties  vs.  The Howard Hughes

Merchants National

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Merchants National Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Merchants National is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Howard Hughes

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Howard Hughes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Howard Hughes is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Merchants National and Howard Hughes

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

The idea behind Merchants National Properties and The Howard Hughes 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.