Correlation Between Core and Morpho

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

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

Diversification Opportunities for Core and Morpho

0.06

Correlation Coefficient

Core  Morpho

Significant diversification

The 3 months correlation between Core and Morpho is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Core and Morpho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morpho and Core 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 Core are associated (or correlated) with Morpho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morpho has no effect on the direction of Core i.e., Core and Morpho go up and down completely randomly.

Pair Corralation between Core and Morpho

Assuming the 90 days trading horizon Core is expected to under-perform the Morpho. But the crypto coin apears to be less risky and, when comparing its historical volatility, Core is 1.64 times less risky than Morpho. The crypto coin trades about -0.04 of its potential returns per unit of risk. The Morpho is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Morpho on April 20, 2025 and sell it today you would earn a total of  103.00  from holding Morpho or generate 101.98% return on investment over 90 days.

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

Core  vs.  Morpho

Core

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Core shareholders.

Morpho

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morpho are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Morpho sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Core and Morpho

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

The idea behind Core and Morpho 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 Commodity Directory module to find actively traded commodities issued by global exchanges.