Correlation Between Univest Pennsylvania and MGP Ingredients

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

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

Diversification Opportunities for Univest Pennsylvania and MGP Ingredients

0.23

Correlation Coefficient

Univest Pennsylvania  MGP Ingredients

Modest diversification

The 3 months correlation between Univest and MGP is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Univest Pennsylvania and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients and Univest Pennsylvania 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 Univest Pennsylvania 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 Univest Pennsylvania i.e., Univest Pennsylvania and MGP Ingredients go up and down completely randomly.

Pair Corralation between Univest Pennsylvania and MGP Ingredients

Given the investment horizon of 90 days Univest Pennsylvania is expected to generate 1.12 times more return on investment than MGP Ingredients. However, Univest Pennsylvania is 1.12 times more volatile than MGP Ingredients. It trades about 0.26 of its potential returns per unit of risk. MGP Ingredients is currently generating about 0.03 per unit of risk. If you would invest  1,983  in Univest Pennsylvania on February 6, 2024 and sell it today you would earn a total of  255.00  from holding Univest Pennsylvania or generate 12.86% return on investment over 90 days.

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

Univest Pennsylvania  vs.  MGP Ingredients

Univest Pennsylvania

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Univest Pennsylvania are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Univest Pennsylvania reported solid returns over the last few months and may actually be approaching a breakup point.

MGP Ingredients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MGP Ingredients is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Univest Pennsylvania and MGP Ingredients

The main advantage of trading using opposite Univest Pennsylvania and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Univest Pennsylvania 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 Univest Pennsylvania 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.