Correlation Between ONT and ARPA

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

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

Diversification Opportunities for ONT and ARPA

0.91

Correlation Coefficient

ONT  ARPA

Almost no diversification

The 3 months correlation between ONT and ARPA is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ONT and ARPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARPA and ONT 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 ONT are associated (or correlated) with ARPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARPA has no effect on the direction of ONT i.e., ONT and ARPA go up and down completely randomly.

Pair Corralation between ONT and ARPA

Assuming the 90 days trading horizon ONT is expected to generate 1.02 times more return on investment than ARPA. However, ONT is 1.02 times more volatile than ARPA. It trades about -0.04 of its potential returns per unit of risk. ARPA is currently generating about -0.04 per unit of risk. If you would invest  16.00  in ONT on May 7, 2025 and sell it today you would lose (3.00) from holding ONT or give up 18.75% of portfolio value over 90 days.

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

ONT  vs.  ARPA

ONT

Risk-Adjusted Performance

Weakest

Over the last 90 days ONT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for ONT shareholders.

ARPA

Risk-Adjusted Performance

Weakest

Over the last 90 days ARPA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for ARPA shareholders.

Pair Trading with ONT and ARPA

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

The idea behind ONT and ARPA 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.