Correlation Between Moelis and Waterstone Financial
Can any of the company-specific risk be diversified away by investing in both Moelis and Waterstone 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 Moelis and Waterstone Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moelis Co and Waterstone Financial, you can compare the effects of market volatilities on Moelis and Waterstone 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 Moelis with a short position of Waterstone Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moelis and Waterstone Financial.
Diversification Opportunities for Moelis and Waterstone Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Moelis and Waterstone is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Moelis Co and Waterstone Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waterstone Financial 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 Waterstone Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waterstone Financial has no effect on the direction of Moelis i.e., Moelis and Waterstone Financial go up and down completely randomly.
Pair Corralation between Moelis and Waterstone Financial
Allowing for the 90-day total investment horizon Moelis Co is expected to generate 1.14 times more return on investment than Waterstone Financial. However, Moelis is 1.14 times more volatile than Waterstone Financial. It trades about 0.06 of its potential returns per unit of risk. Waterstone Financial is currently generating about 0.01 per unit of risk. If you would invest 4,442 in Moelis Co on August 27, 2024 and sell it today you would earn a total of 3,063 from holding Moelis Co or generate 68.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moelis Co vs. Waterstone Financial
Performance |
| Timeline |
| Moelis |
| Waterstone Financial |
Moelis and Waterstone Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moelis and Waterstone Financial
The main advantage of trading using opposite Moelis and Waterstone Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moelis position performs unexpectedly, Waterstone 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 Waterstone Financial will offset losses from the drop in Waterstone Financial's long position.The idea behind Moelis Co and Waterstone Financial 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.| Waterstone Financial vs. National Bank Holdings | Waterstone Financial vs. Community West Bancshares | Waterstone Financial vs. Financial Institutions | Waterstone Financial vs. Kearny Financial Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |