Correlation Between Mercer Opportunistic and Mercer Core

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

By analyzing existing cross correlation between Mercer Opportunistic Fixed and Mercer Core Fixed, you can compare the effects of market volatilities on Mercer Opportunistic and Mercer Core 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 Mercer Opportunistic with a short position of Mercer Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercer Opportunistic and Mercer Core.

Diversification Opportunities for Mercer Opportunistic and Mercer Core

0.78

Correlation Coefficient

Mercer Opportunistic  Mercer Core

Poor diversification

The 3 months correlation between Mercer and Mercer is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mercer Opportunistic Fixed and Mercer Core Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer Core Fixed and Mercer Opportunistic 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 Mercer Opportunistic Fixed are associated (or correlated) with Mercer Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer Core Fixed has no effect on the direction of Mercer Opportunistic i.e., Mercer Opportunistic and Mercer Core go up and down completely randomly.

Pair Corralation between Mercer Opportunistic and Mercer Core

Assuming the 90 days horizon Mercer Opportunistic is expected to generate 4.65 times less return on investment than Mercer Core. But when comparing it to its historical volatility, Mercer Opportunistic Fixed is 1.59 times less risky than Mercer Core. It trades about 0.03 of its potential returns per unit of risk. Mercer Core Fixed is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  914.00  in Mercer Core Fixed on August 20, 2025 and sell it today you would earn a total of  10.00  from holding Mercer Core Fixed or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Mercer Opportunistic Fixed  vs.  Mercer Core Fixed

Mercer Opportunistic

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer Opportunistic Fixed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mercer Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mercer Core Fixed

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer Core Fixed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mercer Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mercer Opportunistic and Mercer Core

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

The idea behind Mercer Opportunistic Fixed and Mercer Core Fixed 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.