Correlation Between Matson Money and Lifestyle
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Matson Money Equity vs. Lifestyle Ii Aggressive
Performance |
Timeline |
Matson Money Equity |
Lifestyle Ii Aggressive |
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.Matson Money vs. Vanguard Total Stock | Matson Money vs. Vanguard 500 Index | Matson Money vs. Vanguard Total Stock | Matson Money vs. Vanguard Total Stock |
Lifestyle vs. Regional Bank Fund | Lifestyle vs. Regional Bank Fund | Lifestyle vs. Multimanager Lifestyle Moderate | Lifestyle vs. Multimanager Lifestyle Balanced |
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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