Correlation Between Matson Money and Lifestyle

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

Diversification Opportunities for Matson Money and Lifestyle

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Matson and Lifestyle is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Lifestyle Ii Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Aggressive and Matson Money 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 Matson Money Equity are associated (or correlated) with Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Aggressive has no effect on the direction of Matson Money i.e., Matson Money and Lifestyle go up and down completely randomly.

Pair Corralation between Matson Money and Lifestyle

Assuming the 90 days horizon Matson Money Equity is expected to generate 1.34 times more return on investment than Lifestyle. However, Matson Money is 1.34 times more volatile than Lifestyle Ii Aggressive. It trades about 0.08 of its potential returns per unit of risk. Lifestyle Ii Aggressive is currently generating about 0.1 per unit of risk. If you would invest  2,866  in Matson Money Equity on September 23, 2024 and sell it today you would earn a total of  659.00  from holding Matson Money Equity or generate 22.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Matson Money Equity  vs.  Lifestyle Ii Aggressive

 Performance 
       Timeline  
Matson Money Equity 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Matson Money Equity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Matson Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Lifestyle Ii Aggressive 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lifestyle Ii Aggressive has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Matson Money and Lifestyle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Matson Money and Lifestyle

The main advantage of trading using opposite Matson Money and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson Money position performs unexpectedly, Lifestyle 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 Lifestyle will offset losses from the drop in Lifestyle's long position.
The idea behind Matson Money Equity and Lifestyle Ii Aggressive 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.
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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