Correlation Between Pace Large and Mesirow Financial
Can any of the company-specific risk be diversified away by investing in both Pace Large and Mesirow 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 Pace Large and Mesirow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Large Value and Mesirow Financial Small, you can compare the effects of market volatilities on Pace Large and Mesirow 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 Pace Large with a short position of Mesirow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Mesirow Financial.
Diversification Opportunities for Pace Large and Mesirow Financial
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and Mesirow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Value and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small and Pace Large 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 Pace Large Value are associated (or correlated) with Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Pace Large i.e., Pace Large and Mesirow Financial go up and down completely randomly.
Pair Corralation between Pace Large and Mesirow Financial
Assuming the 90 days horizon Pace Large is expected to generate 1.4 times less return on investment than Mesirow Financial. But when comparing it to its historical volatility, Pace Large Value is 1.6 times less risky than Mesirow Financial. It trades about 0.15 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,308 in Mesirow Financial Small on September 12, 2024 and sell it today you would earn a total of 115.00 from holding Mesirow Financial Small or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Large Value vs. Mesirow Financial Small
Performance |
| Timeline |
| Pace Large Value |
| Mesirow Financial Small |
Pace Large and Mesirow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Large and Mesirow Financial
The main advantage of trading using opposite Pace Large and Mesirow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large position performs unexpectedly, Mesirow 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 Mesirow Financial will offset losses from the drop in Mesirow Financial's long position.| Pace Large vs. Artisan High Income | Pace Large vs. Morningstar Aggressive Growth | Pace Large vs. Lgm Risk Managed | Pace Large vs. Metropolitan West High |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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