Correlation Between Mesabi Trust and International Stem

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

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

Diversification Opportunities for Mesabi Trust and International Stem

0.42

Correlation Coefficient

Mesabi Trust  International Stem

Very weak diversification

The 3 months correlation between Mesabi and International is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and International Stem Cell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stem Cell and Mesabi Trust 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 Mesabi Trust are associated (or correlated) with International Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stem Cell has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and International Stem go up and down completely randomly.

Pair Corralation between Mesabi Trust and International Stem

Considering the 90-day investment horizon Mesabi Trust is expected to generate 8.83 times less return on investment than International Stem. But when comparing it to its historical volatility, Mesabi Trust is 6.28 times less risky than International Stem. It trades about 0.05 of its potential returns per unit of risk. International Stem Cell is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  18.00  in International Stem Cell on September 28, 2024 and sell it today you would lose (8.00) from holding International Stem Cell or give up 44.44% of portfolio value over 90 days.

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

Mesabi Trust  vs.  International Stem Cell

Mesabi Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

International Stem Cell

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Stem Cell are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, International Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesabi Trust and International Stem

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

The idea behind Mesabi Trust and International Stem Cell 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..