Correlation Between Mesirow Financial and Changing Parameters

Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Changing Parameters 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 Changing Parameters 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 Changing Parameters Fund, you can compare the effects of market volatilities on Mesirow Financial and Changing Parameters 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 Changing Parameters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Changing Parameters.

Diversification Opportunities for Mesirow Financial and Changing Parameters

0.71

Correlation Coefficient

Mesirow Financial  Changing Parameters

Poor diversification

The 3 months correlation between Mesirow and Changing is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Changing Parameters Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changing Parameters 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 Changing Parameters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changing Parameters has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Changing Parameters go up and down completely randomly.

Pair Corralation between Mesirow Financial and Changing Parameters

Assuming the 90 days horizon Mesirow Financial Small is expected to generate 15.59 times more return on investment than Changing Parameters. However, Mesirow Financial is 15.59 times more volatile than Changing Parameters Fund. It trades about 0.21 of its potential returns per unit of risk. Changing Parameters Fund is currently generating about 0.51 per unit of risk. If you would invest  1,364  in Mesirow Financial Small on September 4, 2024 and sell it today you would earn a total of  77.00  from holding Mesirow Financial Small or generate 5.65% return on investment over 90 days.

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

Mesirow Financial Small  vs.  Changing Parameters Fund

Mesirow Financial Small

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mesirow Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Changing Parameters

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Changing Parameters Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Changing Parameters 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 Changing Parameters

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

The idea behind Mesirow Financial Small and Changing Parameters Fund 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.