Correlation Between Picton Mahoney and CI Galaxy

Can any of the company-specific risk be diversified away by investing in both Picton Mahoney and CI Galaxy 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 Picton Mahoney and CI Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Picton Mahoney Fortified and CI Galaxy Multi Crypto, you can compare the effects of market volatilities on Picton Mahoney and CI Galaxy 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 Picton Mahoney with a short position of CI Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Picton Mahoney and CI Galaxy.

Diversification Opportunities for Picton Mahoney and CI Galaxy

0.81

Correlation Coefficient

Picton Mahoney  CI Galaxy

Very poor diversification

The 3 months correlation between Picton and CMCX-B is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and CI Galaxy Multi Crypto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Galaxy Multi and Picton Mahoney 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 Picton Mahoney Fortified are associated (or correlated) with CI Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Galaxy Multi has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and CI Galaxy go up and down completely randomly.

Pair Corralation between Picton Mahoney and CI Galaxy

Assuming the 90 days trading horizon Picton Mahoney is expected to generate 12.0 times less return on investment than CI Galaxy. But when comparing it to its historical volatility, Picton Mahoney Fortified is 7.87 times less risky than CI Galaxy. It trades about 0.13 of its potential returns per unit of risk. CI Galaxy Multi Crypto is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,132  in CI Galaxy Multi Crypto on September 27, 2024 and sell it today you would earn a total of  468.00  from holding CI Galaxy Multi Crypto or generate 41.34% return on investment over 90 days.

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

Picton Mahoney Fortified  vs.  CI Galaxy Multi Crypto

Picton Mahoney Fortified

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Picton Mahoney Fortified are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Picton Mahoney is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Galaxy Multi

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI Galaxy Multi Crypto are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, CI Galaxy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Picton Mahoney and CI Galaxy

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

The idea behind Picton Mahoney Fortified and CI Galaxy Multi Crypto 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.