Correlation Between Morpho and Pendle

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

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

Diversification Opportunities for Morpho and Pendle

0.65

Correlation Coefficient

Morpho  Pendle

Poor diversification

The 3 months correlation between Morpho and Pendle is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Morpho and Pendle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pendle 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 Pendle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pendle has no effect on the direction of Morpho i.e., Morpho and Pendle go up and down completely randomly.

Pair Corralation between Morpho and Pendle

Assuming the 90 days trading horizon Morpho is expected to generate 1.51 times more return on investment than Pendle. However, Morpho is 1.51 times more volatile than Pendle. It trades about 0.18 of its potential returns per unit of risk. Pendle is currently generating about 0.1 per unit of risk. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Morpho  vs.  Pendle

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.

Pendle

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pendle are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Pendle sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morpho and Pendle

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

The idea behind Morpho and Pendle 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.