Correlation Between Mesirow Financial and Monthly Rebalance

Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Monthly Rebalance 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 Monthly Rebalance 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 Monthly Rebalance Nasdaq 100, you can compare the effects of market volatilities on Mesirow Financial and Monthly Rebalance 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 Monthly Rebalance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Monthly Rebalance.

Diversification Opportunities for Mesirow Financial and Monthly Rebalance

0.93

Correlation Coefficient

Mesirow Financial  Monthly Rebalance

Almost no diversification

The 3 months correlation between Mesirow and Monthly is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Monthly Rebalance Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monthly Rebalance 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 Monthly Rebalance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monthly Rebalance has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Monthly Rebalance go up and down completely randomly.

Pair Corralation between Mesirow Financial and Monthly Rebalance

Assuming the 90 days horizon Mesirow Financial is expected to generate 8.57 times less return on investment than Monthly Rebalance. But when comparing it to its historical volatility, Mesirow Financial Small is 1.96 times less risky than Monthly Rebalance. It trades about 0.02 of its potential returns per unit of risk. Monthly Rebalance Nasdaq 100 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  28,393  in Monthly Rebalance Nasdaq 100 on October 24, 2024 and sell it today you would earn a total of  26,680  from holding Monthly Rebalance Nasdaq 100 or generate 93.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Mesirow Financial Small  vs.  Monthly Rebalance Nasdaq 100

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.

Monthly Rebalance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monthly Rebalance Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Monthly Rebalance 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 Monthly Rebalance

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

The idea behind Mesirow Financial Small and Monthly Rebalance Nasdaq 100 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.