Correlation Between EOSDAC and MANTRA
Can any of the company-specific risk be diversified away by investing in both EOSDAC and MANTRA 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 EOSDAC and MANTRA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EOSDAC and MANTRA, you can compare the effects of market volatilities on EOSDAC and MANTRA 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 EOSDAC with a short position of MANTRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EOSDAC and MANTRA.
Diversification Opportunities for EOSDAC and MANTRA
Weak diversification
The 3 months correlation between EOSDAC and MANTRA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and MANTRA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MANTRA and EOSDAC 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 EOSDAC are associated (or correlated) with MANTRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MANTRA has no effect on the direction of EOSDAC i.e., EOSDAC and MANTRA go up and down completely randomly.
Pair Corralation between EOSDAC and MANTRA
Assuming the 90 days trading horizon EOSDAC is expected to generate 2.22 times more return on investment than MANTRA. However, EOSDAC is 2.22 times more volatile than MANTRA. It trades about 0.05 of its potential returns per unit of risk. MANTRA is currently generating about -0.05 per unit of risk. If you would invest 0.03 in EOSDAC on October 25, 2024 and sell it today you would earn a total of 0.00 from holding EOSDAC or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
EOSDAC vs. MANTRA
Performance |
| Timeline |
| EOSDAC |
| MANTRA |
EOSDAC and MANTRA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EOSDAC and MANTRA
The main advantage of trading using opposite EOSDAC and MANTRA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EOSDAC position performs unexpectedly, MANTRA 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 MANTRA will offset losses from the drop in MANTRA's long position.The idea behind EOSDAC and MANTRA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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