Correlation Between Mulberry Group and Freddie Mac

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

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

Diversification Opportunities for Mulberry Group and Freddie Mac

-0.7

Correlation Coefficient

Mulberry Group  Freddie Mac

Excellent diversification

The 3 months correlation between Mulberry and Freddie is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mulberry Group PLC and Freddie Mac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freddie Mac and Mulberry 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 Mulberry Group PLC are associated (or correlated) with Freddie Mac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freddie Mac has no effect on the direction of Mulberry Group i.e., Mulberry Group and Freddie Mac go up and down completely randomly.

Pair Corralation between Mulberry Group and Freddie Mac

Assuming the 90 days trading horizon Mulberry Group PLC is expected to generate 0.44 times more return on investment than Freddie Mac. However, Mulberry Group PLC is 2.27 times less risky than Freddie Mac. It trades about 0.16 of its potential returns per unit of risk. Freddie Mac is currently generating about -0.16 per unit of risk. If you would invest  9,850  in Mulberry Group PLC on September 29, 2024 and sell it today you would earn a total of  850.00  from holding Mulberry Group PLC or generate 8.63% return on investment over 90 days.

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

Mulberry Group PLC  vs.  Freddie Mac

Mulberry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mulberry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Freddie Mac

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freddie Mac are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Freddie Mac unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mulberry Group and Freddie Mac

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

The idea behind Mulberry Group PLC and Freddie Mac 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.