Correlation Between Advent Wireless and Martinrea International

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Advent Wireless and Martinrea International 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 Advent Wireless and Martinrea International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advent Wireless and Martinrea International, you can compare the effects of market volatilities on Advent Wireless and Martinrea International 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 Advent Wireless with a short position of Martinrea International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Wireless and Martinrea International.

Diversification Opportunities for Advent Wireless and Martinrea International

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Advent and Martinrea is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Advent Wireless and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International and Advent Wireless 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 Advent Wireless are associated (or correlated) with Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Advent Wireless i.e., Advent Wireless and Martinrea International go up and down completely randomly.

Pair Corralation between Advent Wireless and Martinrea International

Assuming the 90 days horizon Advent Wireless is expected to generate 0.44 times more return on investment than Martinrea International. However, Advent Wireless is 2.25 times less risky than Martinrea International. It trades about 0.22 of its potential returns per unit of risk. Martinrea International is currently generating about -0.08 per unit of risk. If you would invest  78.00  in Advent Wireless on January 14, 2024 and sell it today you would earn a total of  2.00  from holding Advent Wireless or generate 2.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Advent Wireless  vs.  Martinrea International

 Performance 
       Timeline  
Advent Wireless 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Advent Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advent Wireless is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Martinrea International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Martinrea International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Advent Wireless and Martinrea International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advent Wireless and Martinrea International

The main advantage of trading using opposite Advent Wireless and Martinrea International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Wireless position performs unexpectedly, Martinrea International 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 Martinrea International will offset losses from the drop in Martinrea International's long position.
The idea behind Advent Wireless and Martinrea International 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

Other Complementary Tools

Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk