Correlation Between Mesirow Financial and Us Defensive
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Us Defensive 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 Us Defensive 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 Us Defensive Equity, you can compare the effects of market volatilities on Mesirow Financial and Us Defensive 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 Us Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Us Defensive.
Diversification Opportunities for Mesirow Financial and Us Defensive
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mesirow and REUYX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Us Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Defensive Equity 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 Us Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Defensive Equity has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Us Defensive go up and down completely randomly.
Pair Corralation between Mesirow Financial and Us Defensive
Assuming the 90 days horizon Mesirow Financial Small is expected to under-perform the Us Defensive. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mesirow Financial Small is 1.19 times less risky than Us Defensive. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Us Defensive Equity is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 5,187 in Us Defensive Equity on December 1, 2024 and sell it today you would lose (703.00) from holding Us Defensive Equity or give up 13.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mesirow Financial Small vs. Us Defensive Equity
Performance |
Timeline |
Mesirow Financial Small |
Us Defensive Equity |
Mesirow Financial and Us Defensive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mesirow Financial and Us Defensive
The main advantage of trading using opposite Mesirow Financial and Us Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Us Defensive 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 Us Defensive will offset losses from the drop in Us Defensive's long position.Mesirow Financial vs. Mesirow Financial Small | Mesirow Financial vs. Mesirow Enhanced Core | Mesirow Financial vs. Mesirow Financial High | Mesirow Financial vs. Mesirow Financial High |
Us Defensive vs. International Developed Markets | Us Defensive vs. Global Real Estate | Us Defensive vs. Global Real Estate | Us Defensive vs. Global Real Estate |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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