Correlation Between Mesirow Financial and Jpmorgan Mortgage-backed

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

By analyzing existing cross correlation between Mesirow Financial High and Jpmorgan Mortgage Backed Securities, you can compare the effects of market volatilities on Mesirow Financial and Jpmorgan Mortgage-backed 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 Mesirow Financial with a short position of Jpmorgan Mortgage-backed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Jpmorgan Mortgage-backed.

Diversification Opportunities for Mesirow Financial and Jpmorgan Mortgage-backed

0.24

Correlation Coefficient

Mesirow Financial  Jpmorgan Mortgage-backed

Modest diversification

The 3 months correlation between Mesirow and Jpmorgan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial High and Jpmorgan Mortgage Backed Secur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Mortgage-backed and Mesirow Financial 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 Mesirow Financial High are associated (or correlated) with Jpmorgan Mortgage-backed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Mortgage-backed has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Jpmorgan Mortgage-backed go up and down completely randomly.

Pair Corralation between Mesirow Financial and Jpmorgan Mortgage-backed

Assuming the 90 days horizon Mesirow Financial is expected to generate 6.49 times less return on investment than Jpmorgan Mortgage-backed. But when comparing it to its historical volatility, Mesirow Financial High is 1.9 times less risky than Jpmorgan Mortgage-backed. It trades about 0.05 of its potential returns per unit of risk. Jpmorgan Mortgage Backed Securities is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  995.00  in Jpmorgan Mortgage Backed Securities on December 21, 2024 and sell it today you would earn a total of  32.00  from holding Jpmorgan Mortgage Backed Securities or generate 3.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Mesirow Financial High  vs.  Jpmorgan Mortgage Backed Secur

Mesirow Financial High

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial High are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mesirow Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Mortgage-backed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Mortgage Backed Securities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Mortgage-backed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mesirow Financial and Jpmorgan Mortgage-backed

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

The idea behind Mesirow Financial High and Jpmorgan Mortgage Backed Securities 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.