Correlation Between MTI Wireless and Charter Communications

Can any of the company-specific risk be diversified away by investing in both MTI Wireless and Charter Communications 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 MTI Wireless and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MTI Wireless Edge and Charter Communications Cl, you can compare the effects of market volatilities on MTI Wireless and Charter Communications 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 MTI Wireless with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Wireless and Charter Communications.

Diversification Opportunities for MTI Wireless and Charter Communications

-0.27

Correlation Coefficient

MTI Wireless  Charter Communications

Very good diversification

The 3 months correlation between MTI and Charter is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding MTI Wireless Edge and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and MTI Wireless 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 MTI Wireless Edge are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of MTI Wireless i.e., MTI Wireless and Charter Communications go up and down completely randomly.

Pair Corralation between MTI Wireless and Charter Communications

Assuming the 90 days trading horizon MTI Wireless Edge is expected to generate 1.02 times more return on investment than Charter Communications. However, MTI Wireless is 1.02 times more volatile than Charter Communications Cl. It trades about 0.21 of its potential returns per unit of risk. Charter Communications Cl is currently generating about -0.05 per unit of risk. If you would invest  4,400  in MTI Wireless Edge on December 1, 2024 and sell it today you would earn a total of  1,350  from holding MTI Wireless Edge or generate 30.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

MTI Wireless Edge  vs.  Charter Communications Cl

MTI Wireless Edge

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MTI Wireless Edge 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, MTI Wireless exhibited solid returns over the last few months and may actually be approaching a breakup point.

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MTI Wireless and Charter Communications

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

The idea behind MTI Wireless Edge and Charter Communications Cl 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.