Correlation Between M Split and Financial

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

By analyzing existing cross correlation between M Split Corp and Financial 15 Split, you can compare the effects of market volatilities on M Split and 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 M Split with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Split and Financial.

Diversification Opportunities for M Split and Financial

0.46

Correlation Coefficient

M Split  Financial

Very weak diversification

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

Pair Corralation between M Split and Financial

Assuming the 90 days trading horizon M Split Corp is expected to generate 0.55 times more return on investment than Financial. However, M Split Corp is 1.82 times less risky than Financial. It trades about 0.04 of its potential returns per unit of risk. Financial 15 Split is currently generating about -0.08 per unit of risk. If you would invest  517.00  in M Split Corp on October 6, 2024 and sell it today you would earn a total of  4.00  from holding M Split Corp or generate 0.77% return on investment over 90 days.

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

M Split Corp  vs.  Financial 15 Split

M Split Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M Split Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, M Split is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Financial 15 Split

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with M Split and Financial

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

The idea behind M Split Corp and Financial 15 Split 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.