Correlation Between Mivne Real and Direct Capital

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

By analyzing existing cross correlation between Mivne Real Estate and Direct Capital Investments, you can compare the effects of market volatilities on Mivne Real and Direct Capital 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 Mivne Real with a short position of Direct Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mivne Real and Direct Capital.

Diversification Opportunities for Mivne Real and Direct Capital

0.4

Correlation Coefficient

Mivne Real  Direct Capital

Very weak diversification

The 3 months correlation between Mivne and Direct is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mivne Real Estate and Direct Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Capital Inves and Mivne Real 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 Mivne Real Estate are associated (or correlated) with Direct Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Capital Inves has no effect on the direction of Mivne Real i.e., Mivne Real and Direct Capital go up and down completely randomly.

Pair Corralation between Mivne Real and Direct Capital

Assuming the 90 days trading horizon Mivne Real Estate is expected to under-perform the Direct Capital. But the stock apears to be less risky and, when comparing its historical volatility, Mivne Real Estate is 3.34 times less risky than Direct Capital. The stock trades about -0.11 of its potential returns per unit of risk. The Direct Capital Investments is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  80,000  in Direct Capital Investments on December 27, 2024 and sell it today you would lose (8,310) from holding Direct Capital Investments or give up 10.39% of portfolio value over 90 days.

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

Mivne Real Estate  vs.  Direct Capital Investments

Mivne Real Estate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mivne Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Direct Capital Inves

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direct Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Direct Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mivne Real and Direct Capital

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

The idea behind Mivne Real Estate and Direct Capital Investments 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.