Correlation Between Methanex and Kontoor Brands

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

By analyzing existing cross correlation between Methanex 565 percent and Kontoor Brands, you can compare the effects of market volatilities on Methanex and Kontoor Brands 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 Methanex with a short position of Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methanex and Kontoor Brands.

Diversification Opportunities for Methanex and Kontoor Brands

-0.34

Correlation Coefficient

Methanex  Kontoor Brands

Very good diversification

The 3 months correlation between Methanex and Kontoor is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Methanex 565 percent and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and Methanex 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 Methanex 565 percent are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Methanex i.e., Methanex and Kontoor Brands go up and down completely randomly.

Pair Corralation between Methanex and Kontoor Brands

Assuming the 90 days trading horizon Methanex 565 percent is expected to under-perform the Kontoor Brands. In addition to that, Methanex is 1.41 times more volatile than Kontoor Brands. It trades about -0.08 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.14 per unit of volatility. If you would invest  7,445  in Kontoor Brands on September 13, 2024 and sell it today you would earn a total of  1,483  from holding Kontoor Brands or generate 19.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

Methanex 565 percent  vs.  Kontoor Brands

Methanex 565 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Methanex 565 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for Methanex 565 percent investors.

Kontoor Brands

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Methanex and Kontoor Brands

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

The idea behind Methanex 565 percent and Kontoor Brands 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.