Correlation Between Stacks and Morpho

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

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

Diversification Opportunities for Stacks and Morpho

0.43

Correlation Coefficient

Stacks  Morpho

Very weak diversification

The 3 months correlation between Stacks and Morpho is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stacks and Morpho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morpho and Stacks 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 Stacks 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 Stacks i.e., Stacks and Morpho go up and down completely randomly.

Pair Corralation between Stacks and Morpho

Assuming the 90 days trading horizon Stacks is expected to generate 7.35 times less return on investment than Morpho. But when comparing it to its historical volatility, Stacks is 6.62 times less risky than Morpho. It trades about 0.04 of its potential returns per unit of risk. Morpho is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Morpho on April 20, 2025 and sell it today you would earn a total of  204.00  from holding Morpho or generate 9.223372036854776E16% return on investment over 90 days.

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

Stacks  vs.  Morpho

Stacks

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stacks are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Stacks may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 Stacks and Morpho

The main advantage of trading using opposite Stacks and Morpho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stacks 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 Stacks 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.