Correlation Between MULTI TREX and STANDARD ALLIANCE

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

By analyzing existing cross correlation between MULTI TREX INTEGRATED FOODS and STANDARD ALLIANCE INSURANCE, you can compare the effects of market volatilities on MULTI TREX and STANDARD ALLIANCE 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 MULTI TREX with a short position of STANDARD ALLIANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI TREX and STANDARD ALLIANCE.

Diversification Opportunities for MULTI TREX and STANDARD ALLIANCE

1.0

Correlation Coefficient

MULTI TREX  STANDARD ALLIANCE

No risk reduction

The 3 months correlation between MULTI and STANDARD is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding MULTI TREX INTEGRATED FOODS and STANDARD ALLIANCE INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD ALLIANCE and MULTI TREX 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 MULTI TREX INTEGRATED FOODS are associated (or correlated) with STANDARD ALLIANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD ALLIANCE has no effect on the direction of MULTI TREX i.e., MULTI TREX and STANDARD ALLIANCE go up and down completely randomly.

Pair Corralation between MULTI TREX and STANDARD ALLIANCE

If you would invest  20.00  in STANDARD ALLIANCE INSURANCE on October 8, 2024 and sell it today you would earn a total of  0.00  from holding STANDARD ALLIANCE INSURANCE or generate 0.0% return on investment over 90 days.

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

MULTI TREX INTEGRATED FOODS  vs.  STANDARD ALLIANCE INSURANCE

MULTI TREX INTEGRATED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MULTI TREX INTEGRATED FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, MULTI TREX is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

STANDARD ALLIANCE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STANDARD ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, STANDARD ALLIANCE 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 MULTI TREX and STANDARD ALLIANCE

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

The idea behind MULTI TREX INTEGRATED FOODS and STANDARD ALLIANCE INSURANCE 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.