Correlation Between Moelis and XTRA Bitcoin

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

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

Diversification Opportunities for Moelis and XTRA Bitcoin

0.38

Correlation Coefficient

Moelis  XTRA Bitcoin

Weak diversification

The 3 months correlation between Moelis and XTRA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and XTRA Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTRA Bitcoin 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 XTRA Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTRA Bitcoin has no effect on the direction of Moelis i.e., Moelis and XTRA Bitcoin go up and down completely randomly.

Pair Corralation between Moelis and XTRA Bitcoin

Allowing for the 90-day total investment horizon Moelis Co is expected to under-perform the XTRA Bitcoin. But the stock apears to be less risky and, when comparing its historical volatility, Moelis Co is 5.19 times less risky than XTRA Bitcoin. The stock trades about -0.16 of its potential returns per unit of risk. The XTRA Bitcoin is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  0.12  in XTRA Bitcoin on December 17, 2024 and sell it today you would lose (0.05) from holding XTRA Bitcoin or give up 41.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Moelis Co  vs.  XTRA Bitcoin

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.

XTRA Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days XTRA Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic 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.

Pair Trading with Moelis and XTRA Bitcoin

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

The idea behind Moelis Co and XTRA Bitcoin 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.