Correlation Between Big Time and MLN
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By analyzing existing cross correlation between Big Time and MLN, you can compare the effects of market volatilities on Big Time and MLN 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 Big Time with a short position of MLN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Time and MLN.
Diversification Opportunities for Big Time and MLN
Poor diversification
The 3 months correlation between Big and MLN is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Big Time and MLN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLN and Big Time 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 Big Time are associated (or correlated) with MLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MLN has no effect on the direction of Big Time i.e., Big Time and MLN go up and down completely randomly.
Pair Corralation between Big Time and MLN
Assuming the 90 days trading horizon Big Time is expected to under-perform the MLN. In addition to that, Big Time is 1.6 times more volatile than MLN. It trades about -0.47 of its total potential returns per unit of risk. MLN is currently generating about -0.35 per unit of volatility. If you would invest 1,830 in MLN on November 8, 2024 and sell it today you would lose (552.00) from holding MLN or give up 30.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Time vs. MLN
Performance |
| Timeline |
| Big Time |
| MLN |
Big Time and MLN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Time and MLN
The main advantage of trading using opposite Big Time and MLN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Time position performs unexpectedly, MLN 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 MLN will offset losses from the drop in MLN's long position.The idea behind Big Time and MLN 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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