Correlation Between Moelis and New Mountain
Can any of the company-specific risk be diversified away by investing in both Moelis and New Mountain 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 New Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moelis Co and New Mountain Finance, you can compare the effects of market volatilities on Moelis and New Mountain 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 New Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and New Mountain.
Diversification Opportunities for Moelis and New Mountain
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Moelis and New is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and New Mountain Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Mountain Finance 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 New Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Mountain Finance has no effect on the direction of Moelis i.e., Moelis and New Mountain go up and down completely randomly.
Pair Corralation between Moelis and New Mountain
Allowing for the 90-day total investment horizon Moelis Co is expected to generate 3.22 times more return on investment than New Mountain. However, Moelis is 3.22 times more volatile than New Mountain Finance. It trades about 0.12 of its potential returns per unit of risk. New Mountain Finance is currently generating about 0.0 per unit of risk. If you would invest 6,763 in Moelis Co on August 24, 2024 and sell it today you would earn a total of 701.00 from holding Moelis Co or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moelis Co vs. New Mountain Finance
Performance |
| Timeline |
| Moelis |
| New Mountain Finance |
Moelis and New Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moelis and New Mountain
The main advantage of trading using opposite Moelis and New Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis position performs unexpectedly, New Mountain 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 New Mountain will offset losses from the drop in New Mountain's long position.The idea behind Moelis Co and New Mountain Finance 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.| New Mountain vs. Invesco Advantage MIT | New Mountain vs. Invesco Municipal Trust | New Mountain vs. Invesco California Value | New Mountain vs. Victory Capital Holdings |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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