Correlation Between Manitou BF and Icape Holding

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

By analyzing existing cross correlation between Manitou BF SA and Icape Holding, you can compare the effects of market volatilities on Manitou BF and Icape Holding 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 Manitou BF with a short position of Icape Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manitou BF and Icape Holding.

Diversification Opportunities for Manitou BF and Icape Holding

0.44

Correlation Coefficient

Manitou BF  Icape Holding

Very weak diversification

The 3 months correlation between Manitou and Icape is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Icape Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icape Holding and Manitou BF 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 Manitou BF SA are associated (or correlated) with Icape Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icape Holding has no effect on the direction of Manitou BF i.e., Manitou BF and Icape Holding go up and down completely randomly.

Pair Corralation between Manitou BF and Icape Holding

Assuming the 90 days trading horizon Manitou BF SA is expected to generate 0.64 times more return on investment than Icape Holding. However, Manitou BF SA is 1.57 times less risky than Icape Holding. It trades about -0.02 of its potential returns per unit of risk. Icape Holding is currently generating about -0.02 per unit of risk. If you would invest  2,449  in Manitou BF SA on October 10, 2024 and sell it today you would lose (591.00) from holding Manitou BF SA or give up 24.13% of portfolio value over 90 days.

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

Manitou BF SA  vs.  Icape Holding

Manitou BF SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Manitou BF may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Icape Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icape Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Icape Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Manitou BF and Icape Holding

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

The idea behind Manitou BF SA and Icape Holding 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.