Correlation Between Matson Money and Global Concentrated

Can any of the company-specific risk be diversified away by investing in both Matson Money and Global Concentrated 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 Global Concentrated 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 Global Centrated Portfolio, you can compare the effects of market volatilities on Matson Money and Global Concentrated 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 Global Concentrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Global Concentrated.

Diversification Opportunities for Matson Money and Global Concentrated

0.92

Correlation Coefficient

Matson Money  Global Concentrated

Almost no diversification

The 3 months correlation between Matson and Global is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Global Centrated Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Centrated Por 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 Global Concentrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Centrated Por has no effect on the direction of Matson Money i.e., Matson Money and Global Concentrated go up and down completely randomly.

Pair Corralation between Matson Money and Global Concentrated

Assuming the 90 days horizon Matson Money Equity is expected to generate 1.21 times more return on investment than Global Concentrated. However, Matson Money is 1.21 times more volatile than Global Centrated Portfolio. It trades about 0.17 of its potential returns per unit of risk. Global Centrated Portfolio is currently generating about 0.18 per unit of risk. If you would invest  3,414  in Matson Money Equity on September 4, 2024 and sell it today you would earn a total of  373.00  from holding Matson Money Equity or generate 10.93% 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.  Global Centrated Portfolio

Matson Money Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matson Money Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Matson Money may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global Centrated Por

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Centrated Portfolio are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Concentrated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Matson Money and Global Concentrated

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

The idea behind Matson Money Equity and Global Centrated Portfolio 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.