Correlation Between Mesirow Financial and Ab New

Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Ab New 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 Mesirow Financial and Ab New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mesirow Financial Small and Ab New Jersey, you can compare the effects of market volatilities on Mesirow Financial and Ab New 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 Mesirow Financial with a short position of Ab New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Ab New.

Diversification Opportunities for Mesirow Financial and Ab New

-0.31

Correlation Coefficient

Mesirow Financial  Ab New

Very good diversification

The 3 months correlation between Mesirow and ANJCX is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mesirow Financial Small and Ab New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab New Jersey and Mesirow Financial 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 Mesirow Financial Small are associated (or correlated) with Ab New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab New Jersey has no effect on the direction of Mesirow Financial i.e., Mesirow Financial and Ab New go up and down completely randomly.

Pair Corralation between Mesirow Financial and Ab New

Assuming the 90 days horizon Mesirow Financial Small is expected to generate 4.45 times more return on investment than Ab New. However, Mesirow Financial is 4.45 times more volatile than Ab New Jersey. It trades about 0.13 of its potential returns per unit of risk. Ab New Jersey is currently generating about 0.04 per unit of risk. If you would invest  1,325  in Mesirow Financial Small on September 2, 2024 and sell it today you would earn a total of  118.00  from holding Mesirow Financial Small or generate 8.91% return on investment over 90 days.

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

Mesirow Financial Small  vs.  Ab New Jersey

Mesirow Financial Small

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mesirow Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ab New Jersey

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ab New Jersey are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ab New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mesirow Financial and Ab New

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

The idea behind Mesirow Financial Small and Ab New Jersey 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.