Correlation Between Moelis and BHCCN

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

By analyzing existing cross correlation between Moelis Co and BHCCN 11 30 SEP 28, you can compare the effects of market volatilities on Moelis and BHCCN 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 BHCCN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and BHCCN.

Diversification Opportunities for Moelis and BHCCN

-0.61

Correlation Coefficient

Moelis  BHCCN

Excellent diversification

The 3 months correlation between Moelis and BHCCN is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and BHCCN 11 30 SEP 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHCCN 11 30 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 BHCCN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHCCN 11 30 has no effect on the direction of Moelis i.e., Moelis and BHCCN go up and down completely randomly.

Pair Corralation between Moelis and BHCCN

Allowing for the 90-day total investment horizon Moelis Co is expected to under-perform the BHCCN. In addition to that, Moelis is 1.44 times more volatile than BHCCN 11 30 SEP 28. It trades about -0.15 of its total potential returns per unit of risk. BHCCN 11 30 SEP 28 is currently generating about -0.07 per unit of volatility. If you would invest  9,600  in BHCCN 11 30 SEP 28 on December 21, 2024 and sell it today you would lose (577.00) from holding BHCCN 11 30 SEP 28 or give up 6.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Moelis Co  vs.  BHCCN 11 30 SEP 28

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.

BHCCN 11 30

Risk-Adjusted Performance

Very Weak

Over the last 90 days BHCCN 11 30 SEP 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BHCCN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moelis and BHCCN

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

The idea behind Moelis Co and BHCCN 11 30 SEP 28 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.