Correlation Between Mesirow Financial and Voya Emerging

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

Diversification Opportunities for Mesirow Financial and Voya Emerging

0.01

Correlation Coefficient

Mesirow Financial  Voya Emerging

Significant diversification

The 3 months correlation between Mesirow and Voya is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Voya Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Emerging Markets 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 Voya Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Emerging Markets has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Voya Emerging go up and down completely randomly.

Pair Corralation between Mesirow Financial and Voya Emerging

Assuming the 90 days horizon Mesirow Financial Small is expected to under-perform the Voya Emerging. In addition to that, Mesirow Financial is 4.22 times more volatile than Voya Emerging Markets. It trades about -0.22 of its total potential returns per unit of risk. Voya Emerging Markets is currently generating about -0.34 per unit of volatility. If you would invest  1,039  in Voya Emerging Markets on October 9, 2024 and sell it today you would lose (39.00) from holding Voya Emerging Markets or give up 3.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Mesirow Financial Small  vs.  Voya Emerging Markets

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.

Voya Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Mesirow Financial and Voya Emerging

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

The idea behind Mesirow Financial Small and Voya Emerging Markets 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.