Correlation Between Moelis and AFC Gamma

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

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

Diversification Opportunities for Moelis and AFC Gamma

0.66

Correlation Coefficient

Moelis  AFC Gamma

Poor diversification

The 3 months correlation between Moelis and AFC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and AFC Gamma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Gamma and Moelis 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 Moelis Co are associated (or correlated) with AFC Gamma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Gamma has no effect on the direction of Moelis i.e., Moelis and AFC Gamma go up and down completely randomly.

Pair Corralation between Moelis and AFC Gamma

Allowing for the 90-day total investment horizon Moelis Co is expected to generate 0.64 times more return on investment than AFC Gamma. However, Moelis Co is 1.57 times less risky than AFC Gamma. It trades about -0.13 of its potential returns per unit of risk. AFC Gamma is currently generating about -0.13 per unit of risk. If you would invest  7,382  in Moelis Co on December 27, 2024 and sell it today you would lose (1,219) from holding Moelis Co or give up 16.51% of portfolio value over 90 days.

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

Moelis Co  vs.  AFC Gamma

Moelis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moelis Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AFC Gamma

Risk-Adjusted Performance

Very Weak

Over the last 90 days AFC Gamma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Moelis and AFC Gamma

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

The idea behind Moelis Co and AFC Gamma 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.