Correlation Between Mairs Power and Lifestyle
Can any of the company-specific risk be diversified away by investing in both Mairs Power and Lifestyle 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 Mairs Power and Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mairs Power Growth and Lifestyle Ii Growth, you can compare the effects of market volatilities on Mairs Power and Lifestyle 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 Mairs Power with a short position of Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Lifestyle.
Diversification Opportunities for Mairs Power and Lifestyle
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mairs and Lifestyle is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Lifestyle Ii Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Growth and Mairs Power 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 Mairs Power Growth are associated (or correlated) with Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Growth has no effect on the direction of Mairs Power i.e., Mairs Power and Lifestyle go up and down completely randomly.
Pair Corralation between Mairs Power and Lifestyle
Assuming the 90 days horizon Mairs Power Growth is expected to under-perform the Lifestyle. In addition to that, Mairs Power is 1.39 times more volatile than Lifestyle Ii Growth. It trades about -0.09 of its total potential returns per unit of risk. Lifestyle Ii Growth is currently generating about 0.01 per unit of volatility. If you would invest 1,275 in Lifestyle Ii Growth on December 21, 2024 and sell it today you would earn a total of 3.00 from holding Lifestyle Ii Growth or generate 0.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.33% |
Values | Daily Returns |
Mairs Power Growth vs. Lifestyle Ii Growth
Performance |
Timeline |
Mairs Power Growth |
Lifestyle Ii Growth |
Mairs Power and Lifestyle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mairs Power and Lifestyle
The main advantage of trading using opposite Mairs Power and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mairs Power position performs unexpectedly, Lifestyle 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 Lifestyle will offset losses from the drop in Lifestyle's long position.Mairs Power vs. Meridian Trarian Fund | Mairs Power vs. Mairs Power Balanced | Mairs Power vs. Clipper Fund Inc | Mairs Power vs. Meridian Growth Fund |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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