Correlation Between MITIE GROUP and GARDNER DENVER

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Can any of the company-specific risk be diversified away by investing in both MITIE GROUP and GARDNER DENVER 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 MITIE GROUP and GARDNER DENVER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MITIE GROUP PLC and GARDNER DENVER INC, you can compare the effects of market volatilities on MITIE GROUP and GARDNER DENVER 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 MITIE GROUP with a short position of GARDNER DENVER. Check out your portfolio center. Please also check ongoing floating volatility patterns of MITIE GROUP and GARDNER DENVER.

Diversification Opportunities for MITIE GROUP and GARDNER DENVER

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between MITIE and GARDNER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MITIE GROUP PLC ORD 2 5P and GARDNER DENVER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GARDNER DENVER INC and MITIE GROUP 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 MITIE GROUP PLC are associated (or correlated) with GARDNER DENVER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GARDNER DENVER INC has no effect on the direction of MITIE GROUP i.e., MITIE GROUP and GARDNER DENVER go up and down completely randomly.

Pair Corralation between MITIE GROUP and GARDNER DENVER

If you would invest  6,118  in MITIE GROUP PLC on May 10, 2022 and sell it today you would earn a total of  1,622  from holding MITIE GROUP PLC or generate 26.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

MITIE GROUP PLC ORD 2 5P  vs.  GARDNER DENVER INC

 Performance (%) 
       Timeline  
MITIE GROUP PLC 
MITIE Performance
24 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in MITIE GROUP PLC are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, MITIE GROUP revealed solid returns over the last few months and may actually be approaching a breakup point.

MITIE Price Channel

GARDNER DENVER INC 
GARDNER Performance
0 of 100
Over the last 90 days GARDNER DENVER INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, GARDNER DENVER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MITIE GROUP and GARDNER DENVER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MITIE GROUP and GARDNER DENVER

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

MITIE GROUP PLC

Pair trading matchups for MITIE GROUP

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against MITIE GROUP as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. MITIE GROUP's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, MITIE GROUP's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to MITIE GROUP PLC.
The idea behind MITIE GROUP PLC and GARDNER DENVER INC 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.

GARDNER DENVER INC

Pair trading matchups for GARDNER DENVER

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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