Correlation Between Mesirow Financial and Pace Smallmedium

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

Diversification Opportunities for Mesirow Financial and Pace Smallmedium

0.9

Correlation Coefficient

Mesirow Financial  Pace Smallmedium

Almost no diversification

The 3 months correlation between Mesirow and Pace is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Pace Smallmedium Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Growth 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 Pace Smallmedium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Growth has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Pace Smallmedium go up and down completely randomly.

Pair Corralation between Mesirow Financial and Pace Smallmedium

Assuming the 90 days horizon Mesirow Financial is expected to generate 2.21 times less return on investment than Pace Smallmedium. But when comparing it to its historical volatility, Mesirow Financial Small is 1.12 times less risky than Pace Smallmedium. It trades about 0.09 of its potential returns per unit of risk. Pace Smallmedium Growth is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,247  in Pace Smallmedium Growth on September 14, 2024 and sell it today you would earn a total of  165.00  from holding Pace Smallmedium Growth or generate 13.23% return on investment over 90 days.

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

Mesirow Financial Small  vs.  Pace Smallmedium Growth

Mesirow Financial Small

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial Small are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pace Smallmedium Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pace Smallmedium Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pace Smallmedium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesirow Financial and Pace Smallmedium

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

The idea behind Mesirow Financial Small and Pace Smallmedium Growth 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..