Correlation Between Morpho and SIX

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

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

Diversification Opportunities for Morpho and SIX

0.67

Correlation Coefficient

Morpho  SIX

Poor diversification

The 3 months correlation between Morpho and SIX is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Morpho and SIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIX 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 SIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIX has no effect on the direction of Morpho i.e., Morpho and SIX go up and down completely randomly.

Pair Corralation between Morpho and SIX

Assuming the 90 days trading horizon Morpho is expected to generate 1.35 times more return on investment than SIX. However, Morpho is 1.35 times more volatile than SIX. It trades about 0.17 of its potential returns per unit of risk. SIX is currently generating about 0.08 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  99.00  from holding Morpho or generate 98.02% return on investment over 90 days.

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

Morpho  vs.  SIX

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.

SIX

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIX are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SIX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morpho and SIX

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

The idea behind Morpho and SIX 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.