Correlation Between Mesirow Financial and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Floating Rate 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 Floating Rate 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 Floating Rate Fund, you can compare the effects of market volatilities on Mesirow Financial and Floating Rate 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 Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Floating Rate.
Diversification Opportunities for Mesirow Financial and Floating Rate
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesirow and Floating is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Floating Rate go up and down completely randomly.
Pair Corralation between Mesirow Financial and Floating Rate
Assuming the 90 days horizon Mesirow Financial Small is expected to generate 7.74 times more return on investment than Floating Rate. However, Mesirow Financial is 7.74 times more volatile than Floating Rate Fund. It trades about 0.13 of its potential returns per unit of risk. Floating Rate Fund is currently generating about 0.22 per unit of risk. If you would invest 1,325 in Mesirow Financial Small on September 2, 2024 and sell it today you would earn a total of 118.00 from holding Mesirow Financial Small or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesirow Financial Small vs. Floating Rate Fund
Performance |
| Timeline |
| Mesirow Financial Small |
| Floating Rate |
Mesirow Financial and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesirow Financial and Floating Rate
The main advantage of trading using opposite Mesirow Financial and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesirow Financial position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.| Mesirow Financial vs. Gabelli Global Financial | Mesirow Financial vs. Mesirow Financial Small | Mesirow Financial vs. Icon Financial Fund | Mesirow Financial vs. Prudential Jennison Financial |
| Floating Rate vs. Fidelity Advisor Financial | Floating Rate vs. Prudential Jennison Financial | Floating Rate vs. Vanguard Financials Index | Floating Rate vs. Mesirow Financial Small |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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