Correlation Between MTI Wireless and Global Net

Can any of the company-specific risk be diversified away by investing in both MTI Wireless and Global Net 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 Global Net 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 Global Net Lease, you can compare the effects of market volatilities on MTI Wireless and Global Net 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 Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Wireless and Global Net.

Diversification Opportunities for MTI Wireless and Global Net

0.73

Correlation Coefficient

MTI Wireless  Global Net

Poor diversification

The 3 months correlation between MTI and Global is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MTI Wireless Edge and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of MTI Wireless i.e., MTI Wireless and Global Net go up and down completely randomly.

Pair Corralation between MTI Wireless and Global Net

Assuming the 90 days trading horizon MTI Wireless Edge is expected to generate 2.15 times more return on investment than Global Net. However, MTI Wireless is 2.15 times more volatile than Global Net Lease. It trades about 0.34 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.46 per unit of risk. If you would invest  4,650  in MTI Wireless Edge on December 5, 2024 and sell it today you would earn a total of  1,150  from holding MTI Wireless Edge or generate 24.73% return on investment over 90 days.

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

MTI Wireless Edge  vs.  Global Net Lease

MTI Wireless Edge

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MTI Wireless Edge are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, MTI Wireless exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global Net Lease

Risk-Adjusted Performance

Good

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

Pair Trading with MTI Wireless and Global Net

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

The idea behind MTI Wireless Edge and Global Net Lease 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.