Correlation Between MoneyLion and Alphabet

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

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

Diversification Opportunities for MoneyLion and Alphabet

0.5

Correlation Coefficient

MoneyLion  Alphabet

Very weak diversification

The 3 months correlation between MoneyLion and Alphabet is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and Alphabet Inc Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of MoneyLion i.e., MoneyLion and Alphabet go up and down completely randomly.

Pair Corralation between MoneyLion and Alphabet

Allowing for the 90-day total investment horizon MoneyLion is expected to under-perform the Alphabet. In addition to that, MoneyLion is 3.74 times more volatile than Alphabet Inc Class A. It trades about -0.03 of its total potential returns per unit of risk. Alphabet Inc Class A is currently generating about 0.19 per unit of volatility. If you would invest  15,007  in Alphabet Inc Class A on January 25, 2024 and sell it today you would earn a total of  841.00  from holding Alphabet Inc Class A or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

MoneyLion  vs.  Alphabet Inc Class A

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.

Alphabet Class A

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Alphabet is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MoneyLion and Alphabet

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

The idea behind MoneyLion and Alphabet Inc Class A 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.