Correlation Between MoneyLion and Sapiens International

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

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

Diversification Opportunities for MoneyLion and Sapiens International

0.75

Correlation Coefficient

MoneyLion  Sapiens International

Poor diversification

The 3 months correlation between MoneyLion and Sapiens is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International 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 Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of MoneyLion i.e., MoneyLion and Sapiens International go up and down completely randomly.

Pair Corralation between MoneyLion and Sapiens International

Allowing for the 90-day total investment horizon MoneyLion is expected to generate 1.76 times more return on investment than Sapiens International. However, MoneyLion is 1.76 times more volatile than Sapiens International. It trades about 0.21 of its potential returns per unit of risk. Sapiens International is currently generating about 0.22 per unit of risk. If you would invest  7,245  in MoneyLion on February 13, 2024 and sell it today you would earn a total of  1,050  from holding MoneyLion or generate 14.49% return on investment over 90 days.

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

MoneyLion  vs.  Sapiens International

MoneyLion

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MoneyLion are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, MoneyLion disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sapiens International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sapiens International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Sapiens International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MoneyLion and Sapiens International

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

The idea behind MoneyLion and Sapiens International 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.