Correlation Between Metro and V

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

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

Diversification Opportunities for Metro and V

0.0

Correlation Coefficient

Metro  V

Pay attention - limited upside

The 3 months correlation between Metro and V is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metro Inc and V Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Group and Metro 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 Inc 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 Metro i.e., Metro and V go up and down completely randomly.

Pair Corralation between Metro and V

Assuming the 90 days horizon Metro Inc is expected to generate 0.09 times more return on investment than V. However, Metro Inc is 11.4 times less risky than V. It trades about 0.04 of its potential returns per unit of risk. V Group is currently generating about -0.13 per unit of risk. If you would invest  6,363  in Metro Inc on September 13, 2024 and sell it today you would earn a total of  166.00  from holding Metro Inc or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Metro Inc  vs.  V Group

Metro Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Metro is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Metro and V

The main advantage of trading using opposite Metro and V positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro 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 Metro Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.