Correlation Between Morpho and Convex Finance

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

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

Diversification Opportunities for Morpho and Convex Finance

0.81

Correlation Coefficient

Morpho  Convex Finance

Very poor diversification

The 3 months correlation between Morpho and Convex is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Morpho and Convex Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Convex Finance and Morpho 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 Morpho are associated (or correlated) with Convex Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Convex Finance has no effect on the direction of Morpho i.e., Morpho and Convex Finance go up and down completely randomly.

Pair Corralation between Morpho and Convex Finance

Assuming the 90 days trading horizon Morpho is expected to generate 0.98 times more return on investment than Convex Finance. However, Morpho is 1.02 times less risky than Convex Finance. It trades about 0.14 of its potential returns per unit of risk. Convex Finance is currently generating about 0.13 per unit of risk. If you would invest  118.00  in Morpho on April 22, 2025 and sell it today you would earn a total of  82.00  from holding Morpho or generate 69.49% return on investment over 90 days.

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

Morpho  vs.  Convex Finance

Morpho

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morpho are ranked lower than 11 (%) 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.

Convex Finance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Convex Finance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Convex Finance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morpho and Convex Finance

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

The idea behind Morpho and Convex Finance 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.