Correlation Between Metro Retail and Intelligent Protection

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

By analyzing existing cross correlation between Metro Retail Stores and Intelligent Protection Management, you can compare the effects of market volatilities on Metro Retail and Intelligent Protection 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 Retail with a short position of Intelligent Protection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and Intelligent Protection.

Diversification Opportunities for Metro Retail and Intelligent Protection

0.15

Correlation Coefficient

Metro Retail  Intelligent Protection

Average diversification

The 3 months correlation between Metro and Intelligent is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and Intelligent Protection Managem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Protection and Metro Retail 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 Retail Stores are associated (or correlated) with Intelligent Protection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Protection has no effect on the direction of Metro Retail i.e., Metro Retail and Intelligent Protection go up and down completely randomly.

Pair Corralation between Metro Retail and Intelligent Protection

Assuming the 90 days trading horizon Metro Retail is expected to generate 3.24 times less return on investment than Intelligent Protection. But when comparing it to its historical volatility, Metro Retail Stores is 2.52 times less risky than Intelligent Protection. It trades about 0.07 of its potential returns per unit of risk. Intelligent Protection Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Intelligent Protection Management on December 19, 2024 and sell it today you would earn a total of  32.00  from holding Intelligent Protection Management or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Metro Retail Stores  vs.  Intelligent Protection Managem

Metro Retail Stores

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Retail Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Metro Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Intelligent Protection

Risk-Adjusted Performance

Modest

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

Pair Trading with Metro Retail and Intelligent Protection

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

The idea behind Metro Retail Stores and Intelligent Protection Management 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.