Correlation Between Stonex and Moelis

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

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

Diversification Opportunities for Stonex and Moelis

-0.1

Correlation Coefficient

Stonex  Moelis

Good diversification

The 3 months correlation between Stonex and Moelis is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Stonex Group and Moelis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moelis and Stonex 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 Stonex Group are associated (or correlated) with Moelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moelis has no effect on the direction of Stonex i.e., Stonex and Moelis go up and down completely randomly.

Pair Corralation between Stonex and Moelis

Given the investment horizon of 90 days Stonex Group is expected to generate 0.74 times more return on investment than Moelis. However, Stonex Group is 1.36 times less risky than Moelis. It trades about 0.18 of its potential returns per unit of risk. Moelis Co is currently generating about -0.22 per unit of risk. If you would invest  6,925  in Stonex Group on January 31, 2024 and sell it today you would earn a total of  437.00  from holding Stonex Group or generate 6.31% return on investment over 90 days.

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

Stonex Group  vs.  Moelis Co

Stonex Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stonex Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Stonex may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Moelis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moelis Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Stonex and Moelis

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

The idea behind Stonex Group and Moelis Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.