Correlation Between Mitie Group and METTLER TOLEDO

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

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

Diversification Opportunities for Mitie Group and METTLER TOLEDO

0.99

Correlation Coefficient

Mitie Group  METTLER TOLEDO

No risk reduction

The 3 months correlation between Mitie and METTLER is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group PLC and METTLER TOLEDO INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METTLER TOLEDO INTL and Mitie Group 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 Mitie Group PLC are associated (or correlated) with METTLER TOLEDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METTLER TOLEDO INTL has no effect on the direction of Mitie Group i.e., Mitie Group and METTLER TOLEDO go up and down completely randomly.

Pair Corralation between Mitie Group and METTLER TOLEDO

Assuming the 90 days horizon Mitie Group PLC is expected to generate 0.93 times more return on investment than METTLER TOLEDO. However, Mitie Group PLC is 1.08 times less risky than METTLER TOLEDO. It trades about 0.11 of its potential returns per unit of risk. METTLER TOLEDO INTL is currently generating about 0.1 per unit of risk. If you would invest  113,600  in Mitie Group PLC on September 23, 2024 and sell it today you would earn a total of  2,450  from holding Mitie Group PLC or generate 2.16% return on investment over 90 days.

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

Mitie Group PLC  vs.  METTLER TOLEDO INTL

Mitie Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitie Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mitie Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

METTLER TOLEDO INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METTLER TOLEDO INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METTLER TOLEDO is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mitie Group and METTLER TOLEDO

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

The idea behind Mitie Group PLC and METTLER TOLEDO INTL 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.