Correlation Between Moelis and SWK Holdings

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

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

Diversification Opportunities for Moelis and SWK Holdings

-0.41

Correlation Coefficient

Moelis  SWK Holdings

Very good diversification

The 3 months correlation between Moelis and SWK is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings Corp 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 SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Moelis i.e., Moelis and SWK Holdings go up and down completely randomly.

Pair Corralation between Moelis and SWK Holdings

Allowing for the 90-day total investment horizon Moelis Co is expected to generate 1.16 times more return on investment than SWK Holdings. However, Moelis is 1.16 times more volatile than SWK Holdings Corp. It trades about 0.19 of its potential returns per unit of risk. SWK Holdings Corp is currently generating about 0.09 per unit of risk. If you would invest  7,428  in Moelis Co on October 24, 2024 and sell it today you would earn a total of  471.00  from holding Moelis Co or generate 6.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Moelis Co  vs.  SWK Holdings Corp

Moelis

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis exhibited solid returns over the last few months and may actually be approaching a breakup point.

SWK Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SWK Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, SWK Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Moelis and SWK Holdings

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

The idea behind Moelis Co and SWK Holdings Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.