Correlation Between FACT II and MSP Recovery

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

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

Diversification Opportunities for FACT II and MSP Recovery

-0.56

Correlation Coefficient

FACT II  MSP Recovery

Excellent diversification

The 3 months correlation between FACT and MSP is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery and FACT II 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 FACT II Acquisition are associated (or correlated) with MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of FACT II i.e., FACT II and MSP Recovery go up and down completely randomly.

Pair Corralation between FACT II and MSP Recovery

Given the investment horizon of 90 days FACT II Acquisition is expected to generate 0.74 times more return on investment than MSP Recovery. However, FACT II Acquisition is 1.36 times less risky than MSP Recovery. It trades about 0.02 of its potential returns per unit of risk. MSP Recovery is currently generating about -0.27 per unit of risk. If you would invest  1,017  in FACT II Acquisition on May 20, 2025 and sell it today you would earn a total of  11.00  from holding FACT II Acquisition or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

FACT II Acquisition  vs.  MSP Recovery

FACT II Acquisition

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, FACT II is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MSP Recovery

Risk-Adjusted Performance

Weakest

Over the last 90 days MSP Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with FACT II and MSP Recovery

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

The idea behind FACT II Acquisition and MSP Recovery 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.