Correlation Between MoneyLion and Elmo Software

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

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

Diversification Opportunities for MoneyLion and Elmo Software

0.8

Correlation Coefficient

MoneyLion  Elmo Software

Very poor diversification

The 3 months correlation between MoneyLion and Elmo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and Elmo Software Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmo Software 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 Elmo Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmo Software Limited has no effect on the direction of MoneyLion i.e., MoneyLion and Elmo Software go up and down completely randomly.

Pair Corralation between MoneyLion and Elmo Software

If you would invest  4,738  in MoneyLion on January 24, 2024 and sell it today you would earn a total of  2,310  from holding MoneyLion or generate 48.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

MoneyLion  vs.  Elmo Software 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 inconsistent essential indicators, MoneyLion disclosed solid returns over the last few months and may actually be approaching a breakup point.

Elmo Software Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elmo Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Elmo Software is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MoneyLion and Elmo Software

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

The idea behind MoneyLion and Elmo Software 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.