Correlation Between Moodys and SP Global

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

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

Diversification Opportunities for Moodys and SP Global

0.94

Correlation Coefficient

Moodys  SP Global

Almost no diversification

The 3 months correlation between Moodys and MHL is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Moodys and SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Global and Moodys 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 Moodys are associated (or correlated) with SP Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Global has no effect on the direction of Moodys i.e., Moodys and SP Global go up and down completely randomly.

Pair Corralation between Moodys and SP Global

Assuming the 90 days horizon Moodys is expected to generate 1.21 times more return on investment than SP Global. However, Moodys is 1.21 times more volatile than SP Global. It trades about 0.17 of its potential returns per unit of risk. SP Global is currently generating about 0.15 per unit of risk. If you would invest  36,079  in Moodys on April 20, 2025 and sell it today you would earn a total of  6,921  from holding Moodys or generate 19.18% return on investment over 90 days.

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

Moodys  vs.  SP Global

Moodys

Risk-Adjusted Performance

Good

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

SP Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SP Global are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SP Global reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moodys and SP Global

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

The idea behind Moodys and SP Global 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.