Correlation Between MTI Wireless and Bellevue Healthcare

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

Diversification Opportunities for MTI Wireless and Bellevue Healthcare

0.27

Correlation Coefficient

MTI Wireless  Bellevue Healthcare

Modest diversification

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

Pair Corralation between MTI Wireless and Bellevue Healthcare

Assuming the 90 days trading horizon MTI Wireless Edge is expected to generate 1.98 times more return on investment than Bellevue Healthcare. However, MTI Wireless is 1.98 times more volatile than Bellevue Healthcare Trust. It trades about 0.21 of its potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about -0.06 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

MTI Wireless Edge  vs.  Bellevue Healthcare Trust

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 conflicting technical and fundamental indicators, MTI Wireless exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bellevue Healthcare Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bellevue Healthcare is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MTI Wireless and Bellevue Healthcare

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

The idea behind MTI Wireless Edge and Bellevue Healthcare 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .