Correlation Between MFF Capital and Duketon Mining
Can any of the company-specific risk be diversified away by investing in both MFF Capital and Duketon Mining 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 MFF Capital and Duketon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFF Capital Investments and Duketon Mining, you can compare the effects of market volatilities on MFF Capital and Duketon Mining 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 MFF Capital with a short position of Duketon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Duketon Mining.
Diversification Opportunities for MFF Capital and Duketon Mining
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MFF and Duketon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Duketon Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duketon Mining and MFF Capital 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 MFF Capital Investments are associated (or correlated) with Duketon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duketon Mining has no effect on the direction of MFF Capital i.e., MFF Capital and Duketon Mining go up and down completely randomly.
Pair Corralation between MFF Capital and Duketon Mining
Assuming the 90 days trading horizon MFF Capital Investments is expected to generate 0.27 times more return on investment than Duketon Mining. However, MFF Capital Investments is 3.68 times less risky than Duketon Mining. It trades about 0.23 of its potential returns per unit of risk. Duketon Mining is currently generating about -0.01 per unit of risk. If you would invest 387.00 in MFF Capital Investments on September 18, 2024 and sell it today you would earn a total of 71.00 from holding MFF Capital Investments or generate 18.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
MFF Capital Investments vs. Duketon Mining
Performance |
Timeline |
MFF Capital Investments |
Duketon Mining |
MFF Capital and Duketon Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MFF Capital and Duketon Mining
The main advantage of trading using opposite MFF Capital and Duketon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital position performs unexpectedly, Duketon Mining 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 Duketon Mining will offset losses from the drop in Duketon Mining's long position.MFF Capital vs. Australian Foundation Investment | MFF Capital vs. Metrics Master Income | MFF Capital vs. L1 Long Short | MFF Capital vs. Wam Leaders |
Duketon Mining vs. MFF Capital Investments | Duketon Mining vs. Sky Metals | Duketon Mining vs. Pinnacle Investment Management | Duketon Mining vs. Truscott Mining Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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