Correlation Between Mentor Capital and First Tractor

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

By analyzing existing cross correlation between Mentor Capital and First Tractor, you can compare the effects of market volatilities on Mentor Capital and First Tractor 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 Mentor Capital with a short position of First Tractor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mentor Capital and First Tractor.

Diversification Opportunities for Mentor Capital and First Tractor

0.0

Correlation Coefficient

Mentor Capital  First Tractor

Pay attention - limited upside

The 3 months correlation between Mentor and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mentor Capital and First Tractor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tractor and Mentor 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 Mentor Capital are associated (or correlated) with First Tractor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tractor has no effect on the direction of Mentor Capital i.e., Mentor Capital and First Tractor go up and down completely randomly.

Pair Corralation between Mentor Capital and First Tractor

If you would invest  7.00  in Mentor Capital on September 12, 2024 and sell it today you would lose (1.32) from holding Mentor Capital or give up 18.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mentor Capital  vs.  First Tractor

Mentor Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mentor Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Mentor Capital reported solid returns over the last few months and may actually be approaching a breakup point.

First Tractor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Tractor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First Tractor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mentor Capital and First Tractor

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

The idea behind Mentor Capital and First Tractor 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.