Correlation Between Metro Pacific and MDU Resources

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

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

Diversification Opportunities for Metro Pacific and MDU Resources

0.0

Correlation Coefficient

Metro Pacific  MDU Resources

Pay attention - limited upside

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

Pair Corralation between Metro Pacific and MDU Resources

If you would invest (100.00) in Metro Pacific Investments on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Metro Pacific Investments or generate -100.0% return on investment over 90 days.

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

Metro Pacific Investments  vs.  MDU Resources Group

Metro Pacific Investments

Risk-Adjusted Performance

Very Weak

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

MDU Resources Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MDU Resources Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Metro Pacific and MDU Resources

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

The idea behind Metro Pacific Investments and MDU Resources 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.