Correlation Between Mercer Funds and Mercer Core

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

Diversification Opportunities for Mercer Funds and Mercer Core

0.9

Correlation Coefficient

Mercer Funds  Mercer Core

Almost no diversification

The 3 months correlation between Mercer and Mercer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mercer Funds 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 Funds 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 Funds 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 Funds i.e., Mercer Funds and Mercer Core go up and down completely randomly.

Pair Corralation between Mercer Funds and Mercer Core

Assuming the 90 days horizon Mercer Funds is expected to generate 1.65 times less return on investment than Mercer Core. But when comparing it to its historical volatility, Mercer Funds is 2.13 times less risky than Mercer Core. It trades about 0.15 of its potential returns per unit of risk. Mercer Core Fixed is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  913.00  in Mercer Core Fixed on August 15, 2025 and sell it today you would earn a total of  15.00  from holding Mercer Core Fixed or generate 1.64% return on investment over 90 days.

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

Mercer Funds   vs.  Mercer Core Fixed

Mercer Funds

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mercer Funds are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mercer Funds 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 9 (%) 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 Funds and Mercer Core

The main advantage of trading using opposite Mercer Funds and Mercer Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercer Funds 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 Funds 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..