Correlation Between Mesirow Financial and Sarofim Equity
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Sarofim Equity 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 Sarofim Equity 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 Sarofim Equity, you can compare the effects of market volatilities on Mesirow Financial and Sarofim Equity 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 Sarofim Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Sarofim Equity.
Diversification Opportunities for Mesirow Financial and Sarofim Equity
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mesirow and Sarofim is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Sarofim Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarofim Equity 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 Sarofim Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarofim Equity has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Sarofim Equity go up and down completely randomly.
Pair Corralation between Mesirow Financial and Sarofim Equity
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 0.76 times more return on investment than Sarofim Equity. However, Mesirow Financial Small is 1.31 times less risky than Sarofim Equity. It trades about -0.23 of its potential returns per unit of risk. Sarofim Equity is currently generating about -0.29 per unit of risk. If you would invest 1,422 in Mesirow Financial Small on October 9, 2024 and sell it today you would lose (159.00) from holding Mesirow Financial Small or give up 11.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Sarofim Equity
Performance |
| Timeline |
| Mesirow Financial Small |
| Sarofim Equity |
Mesirow Financial and Sarofim Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Sarofim Equity
The main advantage of trading using opposite Mesirow Financial and Sarofim Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Sarofim Equity 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 Sarofim Equity will offset losses from the drop in Sarofim Equity's long position.| Mesirow Financial vs. Aig Government Money | Mesirow Financial vs. Inverse Government Long | Mesirow Financial vs. Us Government Plus | Mesirow Financial vs. John Hancock Government |
| Sarofim Equity vs. Nationwide Government Bond | Sarofim Equity vs. Voya Government Money | Sarofim Equity vs. Ab Government Exchange | Sarofim Equity vs. Inverse Government Long |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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