Correlation Between Mesirow Financial and Federated Equity
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Federated Equity 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 Federated Equity 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 Federated Equity Income, you can compare the effects of market volatilities on Mesirow Financial and Federated Equity 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 Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Federated Equity.
Diversification Opportunities for Mesirow Financial and Federated Equity
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mesirow and Federated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income 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 Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Federated Equity go up and down completely randomly.
Pair Corralation between Mesirow Financial and Federated Equity
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 1.36 times more return on investment than Federated Equity. However, Mesirow Financial is 1.36 times more volatile than Federated Equity Income. It trades about 0.02 of its potential returns per unit of risk. Federated Equity Income is currently generating about 0.02 per unit of risk. If you would invest 1,143 in Mesirow Financial Small on October 10, 2024 and sell it today you would earn a total of 111.00 from holding Mesirow Financial Small or generate 9.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mesirow Financial Small vs. Federated Equity Income
Performance |
Timeline |
Mesirow Financial Small |
Federated Equity Income |
Mesirow Financial and Federated Equity Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mesirow Financial and Federated Equity
The main advantage of trading using opposite Mesirow Financial and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Federated Equity 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 Federated Equity will offset losses from the drop in Federated Equity's long position.Mesirow Financial vs. Ab Small Cap | Mesirow Financial vs. Semiconductor Ultrasector Profund | Mesirow Financial vs. Versatile Bond Portfolio | Mesirow Financial vs. Arrow Managed Futures |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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