Correlation Between Mh Elite and Matson Money

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

By analyzing existing cross correlation between Mh Elite Fund and Matson Money Equity, you can compare the effects of market volatilities on Mh Elite and Matson Money 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 Mh Elite with a short position of Matson Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mh Elite and Matson Money.

Diversification Opportunities for Mh Elite and Matson Money

0.65

Correlation Coefficient

Mh Elite  Matson Money

Poor diversification

The 3 months correlation between MHEFX and Matson is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mh Elite Fund and Matson Money Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Money Equity and Mh Elite 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 Mh Elite Fund are associated (or correlated) with Matson Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Money Equity has no effect on the direction of Mh Elite i.e., Mh Elite and Matson Money go up and down completely randomly.

Pair Corralation between Mh Elite and Matson Money

Assuming the 90 days horizon Mh Elite Fund is expected to under-perform the Matson Money. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mh Elite Fund is 1.12 times less risky than Matson Money. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Matson Money Equity is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,488  in Matson Money Equity on October 23, 2024 and sell it today you would lose (215.00) from holding Matson Money Equity or give up 6.16% of portfolio value over 90 days.

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

Mh Elite Fund  vs.  Matson Money Equity

Mh Elite Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mh Elite Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Mh Elite is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Matson Money Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matson Money Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Matson Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mh Elite and Matson Money

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

The idea behind Mh Elite Fund and Matson Money Equity 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.