Correlation Between Margo Caribe and V

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

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

Diversification Opportunities for Margo Caribe and V

0.0

Correlation Coefficient

Margo Caribe  V

Pay attention - limited upside

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

Pair Corralation between Margo Caribe and V

Given the investment horizon of 90 days Margo Caribe is expected to generate 2.83 times less return on investment than V. But when comparing it to its historical volatility, Margo Caribe is 1.31 times less risky than V. It trades about 0.04 of its potential returns per unit of risk. V Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.03  in V Group on September 20, 2024 and sell it today you would lose (0.02) from holding V Group or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Margo Caribe  vs.  V Group

Margo Caribe

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Margo Caribe are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Margo Caribe displayed solid returns over the last few months and may actually be approaching a breakup point.

V Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, V is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Margo Caribe and V

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

The idea behind Margo Caribe and V 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.