Correlation Between Malaga Financial and Dallasnews Corp

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

By analyzing existing cross correlation between Malaga Financial and Dallasnews Corp, you can compare the effects of market volatilities on Malaga Financial and Dallasnews Corp 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 Malaga Financial with a short position of Dallasnews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malaga Financial and Dallasnews Corp.

Diversification Opportunities for Malaga Financial and Dallasnews Corp

0.64

Correlation Coefficient

Malaga Financial  Dallasnews Corp

Poor diversification

The 3 months correlation between Malaga and Dallasnews is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Malaga Financial and Dallasnews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dallasnews Corp and Malaga Financial 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 Malaga Financial are associated (or correlated) with Dallasnews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dallasnews Corp has no effect on the direction of Malaga Financial i.e., Malaga Financial and Dallasnews Corp go up and down completely randomly.

Pair Corralation between Malaga Financial and Dallasnews Corp

Given the investment horizon of 90 days Malaga Financial is expected to generate 0.44 times more return on investment than Dallasnews Corp. However, Malaga Financial is 2.25 times less risky than Dallasnews Corp. It trades about -0.03 of its potential returns per unit of risk. Dallasnews Corp is currently generating about -0.17 per unit of risk. If you would invest  2,260  in Malaga Financial on January 25, 2024 and sell it today you would lose (9.00) from holding Malaga Financial or give up 0.4% of portfolio value over 90 days.

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

Malaga Financial  vs.  Dallasnews Corp

Malaga Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dallasnews Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dallasnews Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's essential 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 Malaga Financial and Dallasnews Corp

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

The idea behind Malaga Financial and Dallasnews Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.