Correlation Between Mercantile Investment and Oxford Technology

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

By analyzing existing cross correlation between The Mercantile Investment and Oxford Technology 2, you can compare the effects of market volatilities on Mercantile Investment and Oxford Technology 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 Mercantile Investment with a short position of Oxford Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and Oxford Technology.

Diversification Opportunities for Mercantile Investment and Oxford Technology

0.43

Correlation Coefficient

Mercantile Investment  Oxford Technology

Very weak diversification

The 3 months correlation between Mercantile and Oxford is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and Oxford Technology 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Technology and Mercantile Investment 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 The Mercantile Investment are associated (or correlated) with Oxford Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Technology has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and Oxford Technology go up and down completely randomly.

Pair Corralation between Mercantile Investment and Oxford Technology

If you would invest  700.00  in Oxford Technology 2 on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Oxford Technology 2 or generate 0.0% return on investment over 90 days.

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

The Mercantile Investment  vs.  Oxford Technology 2

The Mercantile Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mercantile Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mercantile Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Oxford Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Technology 2 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Mercantile Investment and Oxford Technology

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

The idea behind The Mercantile Investment and Oxford Technology 2 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.