Correlation Between Mesabi Trust and Vycor Medical

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

By analyzing existing cross correlation between Mesabi Trust and Vycor Medical, you can compare the effects of market volatilities on Mesabi Trust and Vycor Medical 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 Vycor Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesabi Trust and Vycor Medical.

Diversification Opportunities for Mesabi Trust and Vycor Medical

0.01

Correlation Coefficient

Mesabi Trust  Vycor Medical

Significant diversification

The 3 months correlation between Mesabi and Vycor is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and Vycor Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vycor Medical 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 Vycor Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vycor Medical has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and Vycor Medical go up and down completely randomly.

Pair Corralation between Mesabi Trust and Vycor Medical

Considering the 90-day investment horizon Mesabi Trust is expected to generate 4.68 times less return on investment than Vycor Medical. But when comparing it to its historical volatility, Mesabi Trust is 6.38 times less risky than Vycor Medical. It trades about 0.11 of its potential returns per unit of risk. Vycor Medical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7.60  in Vycor Medical on September 23, 2024 and sell it today you would lose (0.61) from holding Vycor Medical or give up 8.03% of portfolio value over 90 days.

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

Mesabi Trust  vs.  Vycor Medical

Mesabi Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 13 (%) 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.

Vycor Medical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vycor Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Vycor Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesabi Trust and Vycor Medical

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

The idea behind Mesabi Trust and Vycor Medical 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.