Correlation Between Picton Mahoney and PHN Multi

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

By analyzing existing cross correlation between Picton Mahoney Fortified and PHN Multi Style All Cap, you can compare the effects of market volatilities on Picton Mahoney and PHN Multi 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 Picton Mahoney with a short position of PHN Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Picton Mahoney and PHN Multi.

Diversification Opportunities for Picton Mahoney and PHN Multi

-0.29

Correlation Coefficient

Picton Mahoney  PHN Multi

Very good diversification

The 3 months correlation between Picton and PHN is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and PHN Multi Style All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Multi Style and Picton Mahoney 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 Picton Mahoney Fortified are associated (or correlated) with PHN Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Multi Style has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and PHN Multi go up and down completely randomly.

Pair Corralation between Picton Mahoney and PHN Multi

Assuming the 90 days trading horizon Picton Mahoney is expected to generate 1.08 times less return on investment than PHN Multi. But when comparing it to its historical volatility, Picton Mahoney Fortified is 3.01 times less risky than PHN Multi. It trades about 0.1 of its potential returns per unit of risk. PHN Multi Style All Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,601  in PHN Multi Style All Cap on October 21, 2024 and sell it today you would earn a total of  12.00  from holding PHN Multi Style All Cap or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Picton Mahoney Fortified  vs.  PHN Multi Style All Cap

Picton Mahoney Fortified

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Picton Mahoney Fortified are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Picton Mahoney is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PHN Multi Style

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHN Multi Style All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, PHN Multi is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Picton Mahoney and PHN Multi

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

The idea behind Picton Mahoney Fortified and PHN Multi Style All Cap 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.