Correlation Between Vycor Medical and Mesabi Trust

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

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

Diversification Opportunities for Vycor Medical and Mesabi Trust

0.01

Correlation Coefficient

Vycor Medical  Mesabi Trust

Significant diversification

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

Pair Corralation between Vycor Medical and Mesabi Trust

Given the investment horizon of 90 days Vycor Medical is expected to generate 4.76 times more return on investment than Mesabi Trust. However, Vycor Medical is 4.76 times more volatile than Mesabi Trust. It trades about 0.05 of its potential returns per unit of risk. Mesabi Trust is currently generating about 0.17 per unit of risk. If you would invest  7.90  in Vycor Medical on September 22, 2024 and sell it today you would lose (0.91) from holding Vycor Medical or give up 11.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Vycor Medical  vs.  Mesabi Trust

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.

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.

Pair Trading with Vycor Medical and Mesabi Trust

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

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