Correlation Between Mercer Us and Mercer Core

Can any of the company-specific risk be diversified away by investing in both Mercer Us 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 Us 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 Smallmid Cap and Mercer Core Fixed, you can compare the effects of market volatilities on Mercer Us 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 Us with a short position of Mercer Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercer Us and Mercer Core.

Diversification Opportunities for Mercer Us and Mercer Core

0.6

Correlation Coefficient

Mercer Us  Mercer Core

Poor diversification

The 3 months correlation between Mercer and Mercer is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mercer Smallmid Cap 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 Us 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 Smallmid Cap 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 Us i.e., Mercer Us and Mercer Core go up and down completely randomly.

Pair Corralation between Mercer Us and Mercer Core

Assuming the 90 days horizon Mercer Smallmid Cap is expected to generate 4.39 times more return on investment than Mercer Core. However, Mercer Us is 4.39 times more volatile than Mercer Core Fixed. It trades about 0.05 of its potential returns per unit of risk. Mercer Core Fixed is currently generating about 0.09 per unit of risk. If you would invest  1,131  in Mercer Smallmid Cap on August 2, 2025 and sell it today you would earn a total of  33.00  from holding Mercer Smallmid Cap or generate 2.92% return on investment over 90 days.

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

Mercer Smallmid Cap  vs.  Mercer Core Fixed

Mercer Smallmid Cap

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer Smallmid Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Mercer Us 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

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer Core Fixed are ranked lower than 7 (%) 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 Us and Mercer Core

The main advantage of trading using opposite Mercer Us and Mercer Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercer Us 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 Smallmid Cap 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.