Correlation Between Mesabi Trust and Chocoladefabriken

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

By analyzing existing cross correlation between Mesabi Trust and Chocoladefabriken Lindt Sprngli, you can compare the effects of market volatilities on Mesabi Trust and Chocoladefabriken 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 Mesabi Trust with a short position of Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesabi Trust and Chocoladefabriken.

Diversification Opportunities for Mesabi Trust and Chocoladefabriken

0.33

Correlation Coefficient

Mesabi Trust  Chocoladefabriken

Weak diversification

The 3 months correlation between Mesabi and Chocoladefabriken is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt and Mesabi Trust 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 Mesabi Trust are associated (or correlated) with Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Mesabi Trust and Chocoladefabriken

Considering the 90-day investment horizon Mesabi Trust is expected to generate 1.02 times less return on investment than Chocoladefabriken. In addition to that, Mesabi Trust is 1.4 times more volatile than Chocoladefabriken Lindt Sprngli. It trades about 0.1 of its total potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about 0.14 per unit of volatility. If you would invest  1,095  in Chocoladefabriken Lindt Sprngli on December 23, 2024 and sell it today you would earn a total of  267.00  from holding Chocoladefabriken Lindt Sprngli or generate 24.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mesabi Trust  vs.  Chocoladefabriken Lindt Sprngl

Mesabi Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Chocoladefabriken Lindt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Sprngli are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chocoladefabriken showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesabi Trust and Chocoladefabriken

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

The idea behind Mesabi Trust and Chocoladefabriken Lindt Sprngli 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 Transaction History module to view history of all your transactions and understand their impact on performance.