Correlation Between MPX International and Gold River

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

By analyzing existing cross correlation between MPX International Corp and Gold River Prods, you can compare the effects of market volatilities on MPX International and Gold River 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 MPX International with a short position of Gold River. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPX International and Gold River.

Diversification Opportunities for MPX International and Gold River

-0.1

Correlation Coefficient

MPX International  Gold River

Good diversification

The 3 months correlation between MPX and Gold is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MPX International Corp and Gold River Prods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold River Prods and MPX International 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 MPX International Corp are associated (or correlated) with Gold River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold River Prods has no effect on the direction of MPX International i.e., MPX International and Gold River go up and down completely randomly.

Pair Corralation between MPX International and Gold River

Assuming the 90 days horizon MPX International Corp is expected to generate 9.32 times more return on investment than Gold River. However, MPX International is 9.32 times more volatile than Gold River Prods. It trades about 0.27 of its potential returns per unit of risk. Gold River Prods is currently generating about 0.05 per unit of risk. If you would invest  0.01  in MPX International Corp on October 23, 2024 and sell it today you would earn a total of  0.00  from holding MPX International Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

MPX International Corp  vs.  Gold River Prods

MPX International Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MPX International Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, MPX International reported solid returns over the last few months and may actually be approaching a breakup point.

Gold River Prods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gold River Prods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Gold River unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MPX International and Gold River

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

The idea behind MPX International Corp and Gold River Prods 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.