Correlation Between MoneyLion and MicroStrategy Incorporated

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

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

Diversification Opportunities for MoneyLion and MicroStrategy Incorporated

-0.38

Correlation Coefficient

MoneyLion  MicroStrategy Incorporated

Very good diversification

The 3 months correlation between MoneyLion and MicroStrategy is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding MoneyLion and MicroStrategy Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroStrategy Incorporated 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 MicroStrategy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroStrategy Incorporated has no effect on the direction of MoneyLion i.e., MoneyLion and MicroStrategy Incorporated go up and down completely randomly.

Pair Corralation between MoneyLion and MicroStrategy Incorporated

Allowing for the 90-day total investment horizon MoneyLion is expected to under-perform the MicroStrategy Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, MoneyLion is 13.05 times less risky than MicroStrategy Incorporated. The stock trades about -0.08 of its potential returns per unit of risk. The MicroStrategy Incorporated is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  28,827  in MicroStrategy Incorporated on January 30, 2025 and sell it today you would earn a total of  9,318  from holding MicroStrategy Incorporated or generate 32.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

MoneyLion  vs.  MicroStrategy Incorporated

MoneyLion

Risk-Adjusted Performance

Very Weak

Over the last 90 days MoneyLion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, MoneyLion is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

MicroStrategy Incorporated

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MicroStrategy Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, MicroStrategy Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MoneyLion and MicroStrategy Incorporated

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

The idea behind MoneyLion and MicroStrategy Incorporated 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..