Correlation Between MSP Recovery and Progyny

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

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

Diversification Opportunities for MSP Recovery and Progyny

0.75

Correlation Coefficient

MSP Recovery  Progyny

Poor diversification

The 3 months correlation between MSP and Progyny is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MSP Recovery and Progyny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progyny and MSP Recovery 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 MSP Recovery are associated (or correlated) with Progyny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progyny has no effect on the direction of MSP Recovery i.e., MSP Recovery and Progyny go up and down completely randomly.

Pair Corralation between MSP Recovery and Progyny

Assuming the 90 days horizon MSP Recovery is expected to generate 3.25 times more return on investment than Progyny. However, MSP Recovery is 3.25 times more volatile than Progyny. It trades about 0.01 of its potential returns per unit of risk. Progyny is currently generating about -0.1 per unit of risk. If you would invest  0.38  in MSP Recovery on September 4, 2024 and sell it today you would lose (0.20) from holding MSP Recovery or give up 52.63% of portfolio value over 90 days.

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

MSP Recovery  vs.  Progyny

MSP Recovery

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days MSP Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent basic indicators, MSP Recovery showed solid returns over the last few months and may actually be approaching a breakup point.

Progyny

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progyny has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MSP Recovery and Progyny

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

The idea behind MSP Recovery and Progyny 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.