Correlation Between Nerdy and MoneyLion

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

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

Diversification Opportunities for Nerdy and MoneyLion

-0.62

Correlation Coefficient

Nerdy  MoneyLion

Excellent diversification

The 3 months correlation between Nerdy and MoneyLion is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nerdy Inc and MoneyLion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyLion and Nerdy 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 Nerdy Inc are associated (or correlated) with MoneyLion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyLion has no effect on the direction of Nerdy i.e., Nerdy and MoneyLion go up and down completely randomly.

Pair Corralation between Nerdy and MoneyLion

Given the investment horizon of 90 days Nerdy Inc is expected to under-perform the MoneyLion. In addition to that, Nerdy is 1.07 times more volatile than MoneyLion. It trades about -0.22 of its total potential returns per unit of risk. MoneyLion is currently generating about 0.21 per unit of volatility. 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nerdy Inc  vs.  MoneyLion

Nerdy Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nerdy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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.

Pair Trading with Nerdy and MoneyLion

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

The idea behind Nerdy Inc and MoneyLion 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.