Correlation Between Orbs and MONA
Can any of the company-specific risk be diversified away by investing in both Orbs and MONA 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 Orbs and MONA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orbs and MONA, you can compare the effects of market volatilities on Orbs and MONA 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 Orbs with a short position of MONA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orbs and MONA.
Diversification Opportunities for Orbs and MONA
Very poor diversification
The 3 months correlation between Orbs and MONA is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Orbs and MONA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONA and Orbs 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 Orbs are associated (or correlated) with MONA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONA has no effect on the direction of Orbs i.e., Orbs and MONA go up and down completely randomly.
Pair Corralation between Orbs and MONA
Assuming the 90 days trading horizon Orbs is expected to generate 1.79 times more return on investment than MONA. However, Orbs is 1.79 times more volatile than MONA. It trades about 0.12 of its potential returns per unit of risk. MONA is currently generating about 0.13 per unit of risk. If you would invest 4.02 in Orbs on December 29, 2023 and sell it today you would earn a total of 0.58 from holding Orbs or generate 14.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Orbs vs. MONA
Performance |
Timeline |
Orbs |
MONA |
Orbs and MONA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Orbs and MONA
The main advantage of trading using opposite Orbs and MONA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orbs position performs unexpectedly, MONA 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 MONA will offset losses from the drop in MONA's long position.The idea behind Orbs and MONA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Equity Valuation Check real value of public entities based on technical and fundamental data |