Correlation Between Mosaic and Community

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

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

Diversification Opportunities for Mosaic and Community

-0.07

Correlation Coefficient

Mosaic  Community

Good diversification

The 3 months correlation between Mosaic and Community is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems and Mosaic 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 The Mosaic are associated (or correlated) with Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Mosaic i.e., Mosaic and Community go up and down completely randomly.

Pair Corralation between Mosaic and Community

Considering the 90-day investment horizon The Mosaic is expected to generate 0.43 times more return on investment than Community. However, The Mosaic is 2.32 times less risky than Community. It trades about 0.11 of its potential returns per unit of risk. Community Health Systems is currently generating about -0.36 per unit of risk. If you would invest  2,566  in The Mosaic on September 13, 2024 and sell it today you would earn a total of  111.00  from holding The Mosaic or generate 4.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

The Mosaic  vs.  Community Health Systems

Mosaic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Community Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Community Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for Community Health Systems investors.

Pair Trading with Mosaic and Community

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

The idea behind The Mosaic and Community Health Systems 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.