Correlation Between Mentor Capital and Armada Mercantile

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

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

Diversification Opportunities for Mentor Capital and Armada Mercantile

-0.17

Correlation Coefficient

Mentor Capital  Armada Mercantile

Good diversification

The 3 months correlation between Mentor and Armada is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Mentor Capital and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile and Mentor Capital 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 Mentor Capital are associated (or correlated) with Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of Mentor Capital i.e., Mentor Capital and Armada Mercantile go up and down completely randomly.

Pair Corralation between Mentor Capital and Armada Mercantile

Given the investment horizon of 90 days Mentor Capital is expected to under-perform the Armada Mercantile. But the otc stock apears to be less risky and, when comparing its historical volatility, Mentor Capital is 2.3 times less risky than Armada Mercantile. The otc stock trades about -0.02 of its potential returns per unit of risk. The Armada Mercantile is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Armada Mercantile on December 29, 2024 and sell it today you would lose (7.00) from holding Armada Mercantile or give up 23.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Mentor Capital  vs.  Armada Mercantile

Mentor Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mentor Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Armada Mercantile

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Mercantile are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Armada Mercantile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mentor Capital and Armada Mercantile

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

The idea behind Mentor Capital and Armada Mercantile 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..