Correlation Between Value Line and Moodys

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

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

Diversification Opportunities for Value Line and Moodys

-0.34

Correlation Coefficient

Value Line  Moodys

Very good diversification

The 3 months correlation between Value and Moodys is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Value Line and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys and Value Line 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 Value Line are associated (or correlated) with Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of Value Line i.e., Value Line and Moodys go up and down completely randomly.

Pair Corralation between Value Line and Moodys

Given the investment horizon of 90 days Value Line is expected to under-perform the Moodys. In addition to that, Value Line is 1.57 times more volatile than Moodys. It trades about -0.01 of its total potential returns per unit of risk. Moodys is currently generating about 0.15 per unit of volatility. If you would invest  46,203  in Moodys on May 6, 2025 and sell it today you would earn a total of  5,782  from holding Moodys or generate 12.51% return on investment over 90 days.

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

Value Line  vs.  Moodys

Value Line

Risk-Adjusted Performance

Very Weak

Over the last 90 days Value Line has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Value Line is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Moodys

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Moodys are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Moodys may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Value Line and Moodys

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

The idea behind Value Line and Moodys 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.