Correlation Between STF Tactical and MerlynAI Corp

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

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

Diversification Opportunities for STF Tactical and MerlynAI Corp

0.86

Correlation Coefficient

STF Tactical  MerlynAI Corp

Very poor diversification

The 3 months correlation between STF and MerlynAI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding STF Tactical Growth and MerlynAI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MerlynAI Corp and STF Tactical 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 STF Tactical Growth are associated (or correlated) with MerlynAI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MerlynAI Corp has no effect on the direction of STF Tactical i.e., STF Tactical and MerlynAI Corp go up and down completely randomly.

Pair Corralation between STF Tactical and MerlynAI Corp

Considering the 90-day investment horizon STF Tactical Growth is expected to generate 1.26 times more return on investment than MerlynAI Corp. However, STF Tactical is 1.26 times more volatile than MerlynAI Corp. It trades about 0.1 of its potential returns per unit of risk. MerlynAI Corp is currently generating about 0.07 per unit of risk. If you would invest  2,134  in STF Tactical Growth on September 20, 2024 and sell it today you would earn a total of  1,407  from holding STF Tactical Growth or generate 65.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	28.48%
Values	Daily Returns

STF Tactical Growth  vs.  MerlynAI Corp

STF Tactical Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STF Tactical Growth are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, STF Tactical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MerlynAI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MerlynAI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, MerlynAI Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with STF Tactical and MerlynAI Corp

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

The idea behind STF Tactical Growth and MerlynAI Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..