Correlation Between MoneyLion and Marketwise

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

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

Diversification Opportunities for MoneyLion and Marketwise

0.02

Correlation Coefficient

MoneyLion  Marketwise

Significant diversification

The 3 months correlation between MoneyLion and Marketwise is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and Marketwise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketwise and MoneyLion 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 MoneyLion are associated (or correlated) with Marketwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketwise has no effect on the direction of MoneyLion i.e., MoneyLion and Marketwise go up and down completely randomly.

Pair Corralation between MoneyLion and Marketwise

Allowing for the 90-day total investment horizon MoneyLion is expected to generate 13.55 times less return on investment than Marketwise. But when comparing it to its historical volatility, MoneyLion is 2.3 times less risky than Marketwise. It trades about 0.01 of its potential returns per unit of risk. Marketwise is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Marketwise on December 2, 2024 and sell it today you would earn a total of  11.00  from holding Marketwise or generate 22.0% return on investment over 90 days.

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

MoneyLion  vs.  Marketwise

MoneyLion

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MoneyLion are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, MoneyLion is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Marketwise

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marketwise are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Marketwise showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MoneyLion and Marketwise

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

The idea behind MoneyLion and Marketwise 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.