Correlation Between MoneyLion and Pagerduty

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

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

Diversification Opportunities for MoneyLion and Pagerduty

-0.61

Correlation Coefficient

MoneyLion  Pagerduty

Excellent diversification

The 3 months correlation between MoneyLion and Pagerduty is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and Pagerduty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagerduty and MoneyLion 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 MoneyLion are associated (or correlated) with Pagerduty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagerduty has no effect on the direction of MoneyLion i.e., MoneyLion and Pagerduty go up and down completely randomly.

Pair Corralation between MoneyLion and Pagerduty

Allowing for the 90-day total investment horizon MoneyLion is expected to generate 1.91 times more return on investment than Pagerduty. However, MoneyLion is 1.91 times more volatile than Pagerduty. It trades about 0.02 of its potential returns per unit of risk. Pagerduty is currently generating about -0.13 per unit of risk. If you would invest  7,132  in MoneyLion on January 29, 2024 and sell it today you would lose (39.00) from holding MoneyLion or give up 0.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

MoneyLion  vs.  Pagerduty

MoneyLion

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MoneyLion are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, MoneyLion disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pagerduty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pagerduty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MoneyLion and Pagerduty

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

The idea behind MoneyLion and Pagerduty 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.