Correlation Between Mesirow Financial and New York

Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and New York 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 New York 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 New York Municipal, you can compare the effects of market volatilities on Mesirow Financial and New York 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 New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and New York.

Diversification Opportunities for Mesirow Financial and New York

0.39

Correlation Coefficient

Mesirow Financial  New York

Weak diversification

The 3 months correlation between Mesirow and New is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial High and New York Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York Municipal 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 New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York Municipal has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and New York go up and down completely randomly.

Pair Corralation between Mesirow Financial and New York

Assuming the 90 days horizon Mesirow Financial High is expected to generate 1.3 times more return on investment than New York. However, Mesirow Financial is 1.3 times more volatile than New York Municipal. It trades about 0.22 of its potential returns per unit of risk. New York Municipal is currently generating about 0.07 per unit of risk. If you would invest  700.00  in Mesirow Financial High on October 25, 2024 and sell it today you would earn a total of  157.00  from holding Mesirow Financial High or generate 22.43% return on investment over 90 days.

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

Mesirow Financial High  vs.  New York Municipal

Mesirow Financial High

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial High are ranked lower than 21 (%) 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.

New York Municipal

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New York Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, New York 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 New York

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

The idea behind Mesirow Financial High and New York Municipal 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.