Correlation Between MQGAU and Tapestry

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

By analyzing existing cross correlation between MQGAU 39 15 JAN 26 and Tapestry, you can compare the effects of market volatilities on MQGAU and Tapestry 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 MQGAU with a short position of Tapestry. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQGAU and Tapestry.

Diversification Opportunities for MQGAU and Tapestry

0.46

Correlation Coefficient

MQGAU  Tapestry

Very weak diversification

The 3 months correlation between MQGAU and Tapestry is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MQGAU 39 15 JAN 26 and Tapestry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tapestry and MQGAU 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 MQGAU 39 15 JAN 26 are associated (or correlated) with Tapestry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tapestry has no effect on the direction of MQGAU i.e., MQGAU and Tapestry go up and down completely randomly.

Pair Corralation between MQGAU and Tapestry

Assuming the 90 days trading horizon MQGAU 39 15 JAN 26 is expected to under-perform the Tapestry. But the bond apears to be less risky and, when comparing its historical volatility, MQGAU 39 15 JAN 26 is 2.24 times less risky than Tapestry. The bond trades about -0.21 of its potential returns per unit of risk. The Tapestry is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  5,019  in Tapestry on October 26, 2024 and sell it today you would earn a total of  2,343  from holding Tapestry or generate 46.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	27.12%
Values	Daily Returns

MQGAU 39 15 JAN 26  vs.  Tapestry

MQGAU 15 JAN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MQGAU 39 15 JAN 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for MQGAU 39 15 JAN 26 investors.

Tapestry

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tapestry are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Tapestry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MQGAU and Tapestry

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

The idea behind MQGAU 39 15 JAN 26 and Tapestry 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.