Correlation Between Alternative Asset and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Alternative Asset and Mesirow Financial 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 Alternative Asset and Mesirow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Asset Allocation and Mesirow Financial Small, you can compare the effects of market volatilities on Alternative Asset and Mesirow Financial 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 Alternative Asset with a short position of Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Asset and Mesirow Financial.
Diversification Opportunities for Alternative Asset and Mesirow Financial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alternative and Mesirow is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Asset Allocation and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small and Alternative Asset 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 Alternative Asset Allocation are associated (or correlated) with Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Alternative Asset i.e., Alternative Asset and Mesirow Financial go up and down completely randomly.
Pair Corralation between Alternative Asset and Mesirow Financial
Assuming the 90 days horizon Alternative Asset Allocation is expected to generate 0.18 times more return on investment than Mesirow Financial. However, Alternative Asset Allocation is 5.62 times less risky than Mesirow Financial. It trades about 0.18 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about -0.09 per unit of risk. If you would invest 1,620 in Alternative Asset Allocation on September 12, 2024 and sell it today you would earn a total of 10.00 from holding Alternative Asset Allocation or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Asset Allocation vs. Mesirow Financial Small
Performance |
| Timeline |
| Alternative Asset |
| Mesirow Financial Small |
Alternative Asset and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Asset and Mesirow Financial
The main advantage of trading using opposite Alternative Asset and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Asset position performs unexpectedly, Mesirow Financial 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 Mesirow Financial will offset losses from the drop in Mesirow Financial's long position.The idea behind Alternative Asset Allocation and Mesirow Financial Small 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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