Correlation Between Mesirow Financial and Capital Income
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Capital Income 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 Mesirow Financial and Capital Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial High and Capital Income Builder, you can compare the effects of market volatilities on Mesirow Financial and Capital Income 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 Mesirow Financial with a short position of Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Capital Income.
Diversification Opportunities for Mesirow Financial and Capital Income
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesirow and CAPITAL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial High and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder and Mesirow Financial 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 Mesirow Financial High are associated (or correlated) with Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Capital Income go up and down completely randomly.
Pair Corralation between Mesirow Financial and Capital Income
Assuming the 90 days horizon Mesirow Financial is expected to generate 1.3 times less return on investment than Capital Income. But when comparing it to its historical volatility, Mesirow Financial High is 3.74 times less risky than Capital Income. It trades about 0.41 of its potential returns per unit of risk. Capital Income Builder is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,941 in Capital Income Builder on October 25, 2024 and sell it today you would earn a total of 105.00 from holding Capital Income Builder or generate 1.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial High vs. Capital Income Builder
Performance |
| Timeline |
| Mesirow Financial High |
| Capital Income Builder |
Mesirow Financial and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Capital Income
The main advantage of trading using opposite Mesirow Financial and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Capital Income 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 Capital Income will offset losses from the drop in Capital Income's long position.| Mesirow Financial vs. Us Government Securities | Mesirow Financial vs. Franklin Adjustable Government | Mesirow Financial vs. Elfun Government Money | Mesirow Financial vs. Inverse Government Long |
| Capital Income vs. Ab Small Cap | Capital Income vs. Vy Columbia Small | Capital Income vs. Nuveen Small Cap | Capital Income vs. Needham Small Cap |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |