Correlation Between MPX International and Rubicon Organics

Can any of the company-specific risk be diversified away by investing in both MPX International and Rubicon Organics 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 Rubicon Organics 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 Rubicon Organics, you can compare the effects of market volatilities on MPX International and Rubicon Organics 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 Rubicon Organics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPX International and Rubicon Organics.

Diversification Opportunities for MPX International and Rubicon Organics

0.06

Correlation Coefficient

MPX International  Rubicon Organics

Significant diversification

The 3 months correlation between MPX and Rubicon is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MPX International Corp and Rubicon Organics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Organics 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 Rubicon Organics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Organics has no effect on the direction of MPX International i.e., MPX International and Rubicon Organics go up and down completely randomly.

Pair Corralation between MPX International and Rubicon Organics

Assuming the 90 days horizon MPX International Corp is expected to generate 23.36 times more return on investment than Rubicon Organics. However, MPX International is 23.36 times more volatile than Rubicon Organics. It trades about 0.15 of its potential returns per unit of risk. Rubicon Organics is currently generating about 0.06 per unit of risk. If you would invest  0.02  in MPX International Corp on December 28, 2024 and sell it today you would lose (0.01) from holding MPX International Corp or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

MPX International Corp  vs.  Rubicon Organics

MPX International Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MPX International Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MPX International reported solid returns over the last few months and may actually be approaching a breakup point.

Rubicon Organics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Rubicon Organics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MPX International and Rubicon Organics

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

The idea behind MPX International Corp and Rubicon Organics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.