Correlation Between Moelis and Interactive Brokers
Can any of the company-specific risk be diversified away by investing in both Moelis and Interactive Brokers 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 Moelis and Interactive Brokers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moelis Co and Interactive Brokers Group, you can compare the effects of market volatilities on Moelis and Interactive Brokers 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 Moelis with a short position of Interactive Brokers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and Interactive Brokers.
Diversification Opportunities for Moelis and Interactive Brokers
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Moelis and Interactive is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers and Moelis 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 Moelis Co are associated (or correlated) with Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Moelis i.e., Moelis and Interactive Brokers go up and down completely randomly.
Pair Corralation between Moelis and Interactive Brokers
Allowing for the 90-day total investment horizon Moelis is expected to generate 1.34 times less return on investment than Interactive Brokers. In addition to that, Moelis is 1.6 times more volatile than Interactive Brokers Group. It trades about 0.19 of its total potential returns per unit of risk. Interactive Brokers Group is currently generating about 0.41 per unit of volatility. If you would invest 15,238 in Interactive Brokers Group on September 1, 2024 and sell it today you would earn a total of 3,871 from holding Interactive Brokers Group or generate 25.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moelis Co vs. Interactive Brokers Group
Performance |
| Timeline |
| Moelis |
| Interactive Brokers |
Moelis and Interactive Brokers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moelis and Interactive Brokers
The main advantage of trading using opposite Moelis and Interactive Brokers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis position performs unexpectedly, Interactive Brokers 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 Interactive Brokers will offset losses from the drop in Interactive Brokers' long position.The idea behind Moelis Co and Interactive Brokers Group 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.| Interactive Brokers vs. Live Ventures | Interactive Brokers vs. Bassett Furniture Industries | Interactive Brokers vs. Haverty Furniture Companies | Interactive Brokers vs. Vera Bradley |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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