Correlation Between MCBC Holdings and Dixie

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

By analyzing existing cross correlation between MCBC Holdings and The Dixie Group, you can compare the effects of market volatilities on MCBC Holdings and Dixie 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 MCBC Holdings with a short position of Dixie. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCBC Holdings and Dixie.

Diversification Opportunities for MCBC Holdings and Dixie

-0.45

Correlation Coefficient

MCBC Holdings  Dixie

Very good diversification

The 3 months correlation between MCBC and Dixie is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and The Dixie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixie Group and MCBC Holdings 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 MCBC Holdings are associated (or correlated) with Dixie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixie Group has no effect on the direction of MCBC Holdings i.e., MCBC Holdings and Dixie go up and down completely randomly.

Pair Corralation between MCBC Holdings and Dixie

Given the investment horizon of 90 days MCBC Holdings is expected to generate 0.49 times more return on investment than Dixie. However, MCBC Holdings is 2.03 times less risky than Dixie. It trades about 0.0 of its potential returns per unit of risk. The Dixie Group is currently generating about -0.04 per unit of risk. If you would invest  2,547  in MCBC Holdings on January 24, 2024 and sell it today you would lose (397.00) from holding MCBC Holdings or give up 15.59% of portfolio value over 90 days.

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

MCBC Holdings  vs.  The Dixie Group

MCBC Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MCBC Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Dixie Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Dixie Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with MCBC Holdings and Dixie

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

The idea behind MCBC Holdings and The Dixie Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.