Correlation Between Knights Of and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Knights Of 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 Knights Of and Mesirow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knights Of Umbus and Mesirow Financial Small, you can compare the effects of market volatilities on Knights Of 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 Knights Of with a short position of Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knights Of and Mesirow Financial.
Diversification Opportunities for Knights Of and Mesirow Financial
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Knights and Mesirow is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Knights Of Umbus 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 Knights Of 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 Knights Of Umbus 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 Knights Of i.e., Knights Of and Mesirow Financial go up and down completely randomly.
Pair Corralation between Knights Of and Mesirow Financial
Assuming the 90 days horizon Knights Of is expected to generate 2.53 times less return on investment than Mesirow Financial. But when comparing it to its historical volatility, Knights Of Umbus is 7.78 times less risky than Mesirow Financial. It trades about 0.14 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,152 in Mesirow Financial Small on September 3, 2024 and sell it today you would earn a total of 292.00 from holding Mesirow Financial Small or generate 25.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knights Of Umbus vs. Mesirow Financial Small
Performance |
| Timeline |
| Knights Of Umbus |
| Mesirow Financial Small |
Knights Of and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knights Of and Mesirow Financial
The main advantage of trading using opposite Knights Of and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knights Of 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.| Knights Of vs. American Funds Conservative | Knights Of vs. Huber Capital Diversified | Knights Of vs. Adams Diversified Equity | Knights Of vs. Massmutual Premier Diversified |
| Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index | Mesirow Financial vs. Vanguard Small Cap Index |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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