Correlation Between MegaLong Canadian and MGP Ingredients
Can any of the company-specific risk be diversified away by investing in both MegaLong Canadian and MGP Ingredients 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 MegaLong Canadian and MGP Ingredients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MegaLong Canadian Banks and MGP Ingredients, you can compare the effects of market volatilities on MegaLong Canadian and MGP Ingredients 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 MegaLong Canadian with a short position of MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of MegaLong Canadian and MGP Ingredients.
Diversification Opportunities for MegaLong Canadian and MGP Ingredients
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MegaLong and MGP is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding MegaLong Canadian Banks and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients and MegaLong Canadian 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 MegaLong Canadian Banks are associated (or correlated) with MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of MegaLong Canadian i.e., MegaLong Canadian and MGP Ingredients go up and down completely randomly.
Pair Corralation between MegaLong Canadian and MGP Ingredients
Assuming the 90 days trading horizon MegaLong Canadian Banks is expected to generate 0.88 times more return on investment than MGP Ingredients. However, MegaLong Canadian Banks is 1.14 times less risky than MGP Ingredients. It trades about 0.31 of its potential returns per unit of risk. MGP Ingredients is currently generating about -0.03 per unit of risk. If you would invest 3,045 in MegaLong Canadian Banks on September 12, 2025 and sell it today you would earn a total of 1,415 from holding MegaLong Canadian Banks or generate 46.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MegaLong Canadian Banks vs. MGP Ingredients
Performance |
| Timeline |
| MegaLong Canadian Banks |
| MGP Ingredients |
MegaLong Canadian and MGP Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MegaLong Canadian and MGP Ingredients
The main advantage of trading using opposite MegaLong Canadian and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MegaLong Canadian position performs unexpectedly, MGP Ingredients 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 MGP Ingredients will offset losses from the drop in MGP Ingredients' long position.The idea behind MegaLong Canadian Banks and MGP Ingredients 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.| MGP Ingredients vs. Nu Skin Enterprises | MGP Ingredients vs. Oatly Group AB | MGP Ingredients vs. Village Super Market | MGP Ingredients vs. Helen of Troy |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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