Correlation Between Mantle and Optimism

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

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

Diversification Opportunities for Mantle and Optimism

0.88

Correlation Coefficient

Mantle  Optimism

Very poor diversification

The 3 months correlation between Mantle and Optimism is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism and Mantle 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 Mantle are associated (or correlated) with Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of Mantle i.e., Mantle and Optimism go up and down completely randomly.

Pair Corralation between Mantle and Optimism

Assuming the 90 days trading horizon Mantle is expected to generate 6.76 times less return on investment than Optimism. But when comparing it to its historical volatility, Mantle is 1.78 times less risky than Optimism. It trades about 0.01 of its potential returns per unit of risk. Optimism is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Optimism on May 4, 2025 and sell it today you would earn a total of  4.00  from holding Optimism or generate 6.56% return on investment over 90 days.

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

Mantle  vs.  Optimism

Mantle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mantle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mantle is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Optimism

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Optimism are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Optimism exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mantle and Optimism

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

The idea behind Mantle and Optimism 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.