Correlation Between MoneyLion and BYD Company

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

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

Diversification Opportunities for MoneyLion and BYD Company

0.68

Correlation Coefficient

MoneyLion  BYD Company

Poor diversification

The 3 months correlation between MoneyLion and BYD is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited 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 BYD Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Limited has no effect on the direction of MoneyLion i.e., MoneyLion and BYD Company go up and down completely randomly.

Pair Corralation between MoneyLion and BYD Company

Allowing for the 90-day total investment horizon MoneyLion is expected to generate 2.88 times more return on investment than BYD Company. However, MoneyLion is 2.88 times more volatile than BYD Company Limited. It trades about 0.21 of its potential returns per unit of risk. BYD Company Limited is currently generating about -0.05 per unit of risk. If you would invest  1,823  in MoneyLion on January 19, 2024 and sell it today you would earn a total of  5,414  from holding MoneyLion or generate 296.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

MoneyLion  vs.  BYD Company Limited

MoneyLion

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MoneyLion are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, MoneyLion disclosed solid returns over the last few months and may actually be approaching a breakup point.

BYD Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BYD Company Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, BYD Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MoneyLion and BYD Company

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

The idea behind MoneyLion and BYD Company Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.