Correlation Between Mesirow Financial and Large Cap
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Large Cap 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 Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesirow Financial Small and Large Cap Value, you can compare the effects of market volatilities on Mesirow Financial and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Large Cap.
Diversification Opportunities for Mesirow Financial and Large Cap
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mesirow and Large is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value 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 Small are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Large Cap go up and down completely randomly.
Pair Corralation between Mesirow Financial and Large Cap
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 1.34 times more return on investment than Large Cap. However, Mesirow Financial is 1.34 times more volatile than Large Cap Value. It trades about 0.22 of its potential returns per unit of risk. Large Cap Value is currently generating about 0.09 per unit of risk. If you would invest 1,364 in Mesirow Financial Small on September 3, 2024 and sell it today you would earn a total of 80.00 from holding Mesirow Financial Small or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Large Cap Value
Performance |
| Timeline |
| Mesirow Financial Small |
| Large Cap Value |
Mesirow Financial and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Large Cap
The main advantage of trading using opposite Mesirow Financial and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| 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 |
| Large Cap vs. Vanguard Value Index | Large Cap vs. Dodge Cox Stock | Large Cap vs. American Funds American | Large Cap vs. American Funds American |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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