Correlation Between Marwyn Value and Edinburgh Investment

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

By analyzing existing cross correlation between Marwyn Value Investors and Edinburgh Investment Trust, you can compare the effects of market volatilities on Marwyn Value and Edinburgh Investment 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 Marwyn Value with a short position of Edinburgh Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marwyn Value and Edinburgh Investment.

Diversification Opportunities for Marwyn Value and Edinburgh Investment

-0.2

Correlation Coefficient

Marwyn Value  Edinburgh Investment

Good diversification

The 3 months correlation between Marwyn and Edinburgh is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Marwyn Value Investors and Edinburgh Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Investment and Marwyn Value 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 Marwyn Value Investors are associated (or correlated) with Edinburgh Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Investment has no effect on the direction of Marwyn Value i.e., Marwyn Value and Edinburgh Investment go up and down completely randomly.

Pair Corralation between Marwyn Value and Edinburgh Investment

Assuming the 90 days trading horizon Marwyn Value Investors is expected to generate 2.28 times more return on investment than Edinburgh Investment. However, Marwyn Value is 2.28 times more volatile than Edinburgh Investment Trust. It trades about 0.61 of its potential returns per unit of risk. Edinburgh Investment Trust is currently generating about -0.15 per unit of risk. If you would invest  8,600  in Marwyn Value Investors on October 9, 2024 and sell it today you would earn a total of  1,450  from holding Marwyn Value Investors or generate 16.86% return on investment over 90 days.

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

Marwyn Value Investors  vs.  Edinburgh Investment Trust

Marwyn Value Investors

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marwyn Value Investors are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Marwyn Value exhibited solid returns over the last few months and may actually be approaching a breakup point.

Edinburgh Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Edinburgh Investment Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Edinburgh Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Marwyn Value and Edinburgh Investment

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

The idea behind Marwyn Value Investors and Edinburgh Investment Trust 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.