Correlation Between MMEX Resources and SP High

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

By analyzing existing cross correlation between MMEX Resources Corp and SP High Yield, you can compare the effects of market volatilities on MMEX Resources and SP High 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 MMEX Resources with a short position of SP High. Check out your portfolio center. Please also check ongoing floating volatility patterns of MMEX Resources and SP High.

Diversification Opportunities for MMEX Resources and SP High

-0.46

Correlation Coefficient

MMEX Resources  SP High

Very good diversification

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

Pair Corralation between MMEX Resources and SP High

Given the investment horizon of 90 days MMEX Resources Corp is expected to generate 472.4 times more return on investment than SP High. However, MMEX Resources is 472.4 times more volatile than SP High Yield. It trades about 0.29 of its potential returns per unit of risk. SP High Yield is currently generating about -0.13 per unit of risk. If you would invest  0.01  in MMEX Resources Corp on September 25, 2024 and sell it today you would earn a total of  0.00  from holding MMEX Resources Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

MMEX Resources Corp  vs.  SP High Yield

Pair Trading with MMEX Resources and SP High

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

The idea behind MMEX Resources Corp and SP High Yield 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.