Correlation Between Mesirow Financial and High-yield Fund

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

By analyzing existing cross correlation between Mesirow Financial Small and High Yield Fund R5, you can compare the effects of market volatilities on Mesirow Financial and High-yield Fund 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 High-yield Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and High-yield Fund.

Diversification Opportunities for Mesirow Financial and High-yield Fund

0.32

Correlation Coefficient

Mesirow Financial  High-yield Fund

Weak diversification

The 3 months correlation between Mesirow and High-yield is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and High Yield Fund R5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 Small are associated (or correlated) with High-yield Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and High-yield Fund go up and down completely randomly.

Pair Corralation between Mesirow Financial and High-yield Fund

Assuming the 90 days horizon Mesirow Financial is expected to generate 1.61 times less return on investment than High-yield Fund. In addition to that, Mesirow Financial is 4.11 times more volatile than High Yield Fund R5. It trades about 0.02 of its total potential returns per unit of risk. High Yield Fund R5 is currently generating about 0.1 per unit of volatility. If you would invest  442.00  in High Yield Fund R5 on October 23, 2024 and sell it today you would earn a total of  68.00  from holding High Yield Fund R5 or generate 15.38% 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 Small  vs.  High Yield Fund R5

Mesirow Financial Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

High Yield Fund

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Fund R5 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, High-yield Fund 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 High-yield Fund

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

The idea behind Mesirow Financial Small and High Yield Fund R5 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.