Correlation Between BASE and MoneyLion

Can any of the company-specific risk be diversified away by investing in both BASE and MoneyLion 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 BASE and MoneyLion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BASE Inc and MoneyLion, you can compare the effects of market volatilities on BASE and MoneyLion 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 BASE with a short position of MoneyLion. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASE and MoneyLion.

Diversification Opportunities for BASE and MoneyLion

0.33

Correlation Coefficient

BASE  MoneyLion

Weak diversification

The 3 months correlation between BASE and MoneyLion is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and MoneyLion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyLion and BASE 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 BASE Inc are associated (or correlated) with MoneyLion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyLion has no effect on the direction of BASE i.e., BASE and MoneyLion go up and down completely randomly.

Pair Corralation between BASE and MoneyLion

Assuming the 90 days horizon BASE is expected to generate 1.78 times less return on investment than MoneyLion. But when comparing it to its historical volatility, BASE Inc is 1.45 times less risky than MoneyLion. It trades about 0.05 of its potential returns per unit of risk. MoneyLion is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,039  in MoneyLion on September 30, 2024 and sell it today you would earn a total of  1,619  from holding MoneyLion or generate 23.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BASE Inc  vs.  MoneyLion

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

MoneyLion

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MoneyLion are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, MoneyLion disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BASE and MoneyLion

The main advantage of trading using opposite BASE and MoneyLion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASE position performs unexpectedly, MoneyLion 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 MoneyLion will offset losses from the drop in MoneyLion's long position.

The idea behind BASE Inc and MoneyLion pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.