Correlation Between MFC Asset and Firetrade Engineering

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

By analyzing existing cross correlation between MFC Asset Management and Firetrade Engineering Public, you can compare the effects of market volatilities on MFC Asset and Firetrade Engineering 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 MFC Asset with a short position of Firetrade Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Asset and Firetrade Engineering.

Diversification Opportunities for MFC Asset and Firetrade Engineering

0.72

Correlation Coefficient

MFC Asset  Firetrade Engineering

Poor diversification

The 3 months correlation between MFC and Firetrade is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MFC Asset Management and Firetrade Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firetrade Engineering and MFC Asset 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 MFC Asset Management are associated (or correlated) with Firetrade Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firetrade Engineering has no effect on the direction of MFC Asset i.e., MFC Asset and Firetrade Engineering go up and down completely randomly.

Pair Corralation between MFC Asset and Firetrade Engineering

Assuming the 90 days trading horizon MFC Asset Management is expected to generate 3.44 times more return on investment than Firetrade Engineering. However, MFC Asset is 3.44 times more volatile than Firetrade Engineering Public. It trades about 0.12 of its potential returns per unit of risk. Firetrade Engineering Public is currently generating about 0.14 per unit of risk. If you would invest  2,210  in MFC Asset Management on September 13, 2024 and sell it today you would earn a total of  515.00  from holding MFC Asset Management or generate 23.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

MFC Asset Management  vs.  Firetrade Engineering Public

MFC Asset Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Asset Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, MFC Asset disclosed solid returns over the last few months and may actually be approaching a breakup point.

Firetrade Engineering

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Firetrade Engineering Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Firetrade Engineering may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MFC Asset and Firetrade Engineering

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

The idea behind MFC Asset Management and Firetrade Engineering Public 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.