Correlation Between Matson Money and Victory Sycamore

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

By analyzing existing cross correlation between Matson Money Equity and Victory Sycamore Small, you can compare the effects of market volatilities on Matson Money and Victory Sycamore 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 Matson Money with a short position of Victory Sycamore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Victory Sycamore.

Diversification Opportunities for Matson Money and Victory Sycamore

0.96

Correlation Coefficient

Matson Money  Victory Sycamore

Almost no diversification

The 3 months correlation between Matson and Victory is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Victory Sycamore Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Sycamore Small and Matson Money 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 Matson Money Equity are associated (or correlated) with Victory Sycamore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Sycamore Small has no effect on the direction of Matson Money i.e., Matson Money and Victory Sycamore go up and down completely randomly.

Pair Corralation between Matson Money and Victory Sycamore

Assuming the 90 days horizon Matson Money Equity is expected to generate 0.62 times more return on investment than Victory Sycamore. However, Matson Money Equity is 1.61 times less risky than Victory Sycamore. It trades about 0.09 of its potential returns per unit of risk. Victory Sycamore Small is currently generating about -0.01 per unit of risk. If you would invest  3,469  in Matson Money Equity on September 18, 2024 and sell it today you would earn a total of  196.00  from holding Matson Money Equity or generate 5.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Matson Money Equity  vs.  Victory Sycamore Small

Matson Money Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matson Money Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Matson Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Victory Sycamore Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Sycamore Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Victory Sycamore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matson Money and Victory Sycamore

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

The idea behind Matson Money Equity and Victory Sycamore Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.