Correlation Between Alphabet and Mesirow Financial

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

By analyzing existing cross correlation between Alphabet Inc Class C and Mesirow Financial Small, you can compare the effects of market volatilities on Alphabet and Mesirow Financial 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 Alphabet with a short position of Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Mesirow Financial.

Diversification Opportunities for Alphabet and Mesirow Financial

-0.05

Correlation Coefficient

Alphabet  Mesirow Financial

Good diversification

The 3 months correlation between Alphabet and Mesirow is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Alphabet i.e., Alphabet and Mesirow Financial go up and down completely randomly.

Pair Corralation between Alphabet and Mesirow Financial

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.26 times more return on investment than Mesirow Financial. However, Alphabet is 1.26 times more volatile than Mesirow Financial Small. It trades about 0.03 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about -0.16 per unit of risk. If you would invest  17,030  in Alphabet Inc Class C on November 29, 2024 and sell it today you would earn a total of  440.00  from holding Alphabet Inc Class C or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alphabet Inc Class C  vs.  Mesirow Financial Small

Alphabet Class C

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alphabet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Mesirow Financial Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesirow Financial Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Alphabet and Mesirow Financial

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

The idea behind Alphabet Inc Class C and Mesirow Financial Small 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..