Correlation Between FT Cboe and MerlynAI Corp

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

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

Diversification Opportunities for FT Cboe and MerlynAI Corp

0.91

Correlation Coefficient

FT Cboe  MerlynAI Corp

Almost no diversification

The 3 months correlation between DFEB and MerlynAI is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and MerlynAI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MerlynAI Corp and FT Cboe 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 FT Cboe Vest are associated (or correlated) with MerlynAI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MerlynAI Corp has no effect on the direction of FT Cboe i.e., FT Cboe and MerlynAI Corp go up and down completely randomly.

Pair Corralation between FT Cboe and MerlynAI Corp

Given the investment horizon of 90 days FT Cboe is expected to generate 1.08 times less return on investment than MerlynAI Corp. But when comparing it to its historical volatility, FT Cboe Vest is 2.01 times less risky than MerlynAI Corp. It trades about 0.12 of its potential returns per unit of risk. MerlynAI Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,749  in MerlynAI Corp on September 20, 2024 and sell it today you would earn a total of  203.00  from holding MerlynAI Corp or generate 7.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	28.48%
Values	Daily Returns

FT Cboe Vest  vs.  MerlynAI Corp

FT Cboe Vest

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MerlynAI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MerlynAI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, MerlynAI Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FT Cboe and MerlynAI Corp

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

The idea behind FT Cboe Vest and MerlynAI 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.