Correlation Between Netcapital and Moelis

Can any of the company-specific risk be diversified away by investing in both Netcapital and Moelis 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 Netcapital and Moelis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Netcapital and Moelis Co, you can compare the effects of market volatilities on Netcapital and Moelis 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 Netcapital with a short position of Moelis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netcapital and Moelis.

Diversification Opportunities for Netcapital and Moelis

-0.25

Correlation Coefficient

Netcapital  Moelis

Very good diversification

The 3 months correlation between Netcapital and Moelis is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital and Moelis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moelis and Netcapital 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 Netcapital are associated (or correlated) with Moelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moelis has no effect on the direction of Netcapital i.e., Netcapital and Moelis go up and down completely randomly.

Pair Corralation between Netcapital and Moelis

Given the investment horizon of 90 days Netcapital is expected to under-perform the Moelis. In addition to that, Netcapital is 3.81 times more volatile than Moelis Co. It trades about -0.05 of its total potential returns per unit of risk. Moelis Co is currently generating about 0.08 per unit of volatility. If you would invest  3,586  in Moelis Co on September 7, 2024 and sell it today you would earn a total of  3,939  from holding Moelis Co or generate 109.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Netcapital  vs.  Moelis Co

Netcapital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Netcapital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Moelis

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moelis Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Moelis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Netcapital and Moelis

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

The idea behind Netcapital and Moelis Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.