Correlation Between MoneyLion and Porch

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

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

Diversification Opportunities for MoneyLion and Porch

-0.1

Correlation Coefficient

MoneyLion  Porch

Good diversification

The 3 months correlation between MoneyLion and Porch is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and Porch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porch Group 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 Porch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porch Group has no effect on the direction of MoneyLion i.e., MoneyLion and Porch go up and down completely randomly.

Pair Corralation between MoneyLion and Porch

Allowing for the 90-day total investment horizon MoneyLion is expected to generate 2.72 times less return on investment than Porch. But when comparing it to its historical volatility, MoneyLion is 2.0 times less risky than Porch. It trades about 0.05 of its potential returns per unit of risk. Porch Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  376.00  in Porch Group on December 4, 2024 and sell it today you would earn a total of  316.00  from holding Porch Group or generate 84.04% return on investment over 90 days.

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

MoneyLion  vs.  Porch Group

MoneyLion

Risk-Adjusted Performance

Very Weak

Over the last 90 days MoneyLion has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Porch Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Porch Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Porch demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MoneyLion and Porch

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

The idea behind MoneyLion and Porch Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.