Correlation Between FIRST MUTUAL and Morgan Co

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

By analyzing existing cross correlation between FIRST MUTUAL PROPERTIES and Morgan Co Multi, you can compare the effects of market volatilities on FIRST MUTUAL and Morgan Co 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 FIRST MUTUAL with a short position of Morgan Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST MUTUAL and Morgan Co.

Diversification Opportunities for FIRST MUTUAL and Morgan Co

0.57

Correlation Coefficient

FIRST MUTUAL  Morgan Co

Very weak diversification

The 3 months correlation between FIRST and Morgan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FIRST MUTUAL PROPERTIES and Morgan Co Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Co Multi and FIRST MUTUAL 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 FIRST MUTUAL PROPERTIES are associated (or correlated) with Morgan Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Co Multi has no effect on the direction of FIRST MUTUAL i.e., FIRST MUTUAL and Morgan Co go up and down completely randomly.

Pair Corralation between FIRST MUTUAL and Morgan Co

Assuming the 90 days trading horizon FIRST MUTUAL is expected to generate 1.81 times less return on investment than Morgan Co. But when comparing it to its historical volatility, FIRST MUTUAL PROPERTIES is 1.17 times less risky than Morgan Co. It trades about 0.25 of its potential returns per unit of risk. Morgan Co Multi is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  6,500  in Morgan Co Multi on September 28, 2024 and sell it today you would earn a total of  14,600  from holding Morgan Co Multi or generate 224.62% return on investment over 90 days.

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

FIRST MUTUAL PROPERTIES  vs.  Morgan Co Multi

FIRST MUTUAL PROPERTIES

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST MUTUAL PROPERTIES are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, FIRST MUTUAL demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Morgan Co Multi

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Co Multi are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, Morgan Co showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIRST MUTUAL and Morgan Co

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

The idea behind FIRST MUTUAL PROPERTIES and Morgan Co Multi 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.