Correlation Between Polygon and MOF
Can any of the company-specific risk be diversified away by investing in both Polygon and MOF 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 Polygon and MOF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygon and MOF, you can compare the effects of market volatilities on Polygon and MOF 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 Polygon with a short position of MOF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygon and MOF.
Diversification Opportunities for Polygon and MOF
Pay attention - limited upside
The 3 months correlation between Polygon and MOF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and MOF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOF and Polygon 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 Polygon are associated (or correlated) with MOF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOF has no effect on the direction of Polygon i.e., Polygon and MOF go up and down completely randomly.
Pair Corralation between Polygon and MOF
If you would invest 0.00 in MOF on January 24, 2024 and sell it today you would earn a total of 0.00 from holding MOF or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polygon vs. MOF
Performance |
| Timeline |
| Polygon |
| MOF |
Polygon and MOF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polygon and MOF
The main advantage of trading using opposite Polygon and MOF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon position performs unexpectedly, MOF 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 MOF will offset losses from the drop in MOF's long position.The idea behind Polygon and MOF 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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