Correlation Between MONA and Bitcoin SV

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

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

Diversification Opportunities for MONA and Bitcoin SV

0.87

Correlation Coefficient

MONA  Bitcoin SV

Very poor diversification

The 3 months correlation between MONA and Bitcoin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MONA and Bitcoin SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin SV and MONA 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 MONA are associated (or correlated) with Bitcoin SV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin SV has no effect on the direction of MONA i.e., MONA and Bitcoin SV go up and down completely randomly.

Pair Corralation between MONA and Bitcoin SV

Assuming the 90 days trading horizon MONA is expected to generate 0.67 times more return on investment than Bitcoin SV. However, MONA is 1.5 times less risky than Bitcoin SV. It trades about -0.11 of its potential returns per unit of risk. Bitcoin SV is currently generating about -0.17 per unit of risk. If you would invest  38.00  in MONA on January 30, 2024 and sell it today you would lose (4.00) from holding MONA or give up 10.53% of portfolio value over 90 days.

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

MONA  vs.  Bitcoin SV

MONA

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days MONA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MONA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bitcoin SV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin SV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bitcoin SV may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with MONA and Bitcoin SV

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

The idea behind MONA and Bitcoin SV 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .