Correlation Between Peninsula and Menif Financial

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

By analyzing existing cross correlation between Peninsula Group and Menif Financial Services, you can compare the effects of market volatilities on Peninsula and Menif Financial 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 Peninsula with a short position of Menif Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peninsula and Menif Financial.

Diversification Opportunities for Peninsula and Menif Financial

0.94

Correlation Coefficient

Peninsula  Menif Financial

Almost no diversification

The 3 months correlation between Peninsula and Menif is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Peninsula Group and Menif Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menif Financial Services and Peninsula 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 Peninsula Group are associated (or correlated) with Menif Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menif Financial Services has no effect on the direction of Peninsula i.e., Peninsula and Menif Financial go up and down completely randomly.

Pair Corralation between Peninsula and Menif Financial

Assuming the 90 days trading horizon Peninsula Group is expected to generate 0.96 times more return on investment than Menif Financial. However, Peninsula Group is 1.05 times less risky than Menif Financial. It trades about 0.29 of its potential returns per unit of risk. Menif Financial Services is currently generating about 0.23 per unit of risk. If you would invest  15,900  in Peninsula Group on September 2, 2024 and sell it today you would earn a total of  4,530  from holding Peninsula Group or generate 28.49% return on investment over 90 days.

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

Peninsula Group  vs.  Menif Financial Services

Peninsula Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Peninsula Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Peninsula sustained solid returns over the last few months and may actually be approaching a breakup point.

Menif Financial Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Menif Financial Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menif Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peninsula and Menif Financial

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

The idea behind Peninsula Group and Menif Financial Services 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.