Correlation Between Mantle and COFI
Can any of the company-specific risk be diversified away by investing in both Mantle and COFI 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 COFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mantle and COFI, you can compare the effects of market volatilities on Mantle and COFI 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 COFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mantle and COFI.
Diversification Opportunities for Mantle and COFI
Pay attention - limited upside
The 3 months correlation between Mantle and COFI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and COFI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFI 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 COFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFI has no effect on the direction of Mantle i.e., Mantle and COFI go up and down completely randomly.
Pair Corralation between Mantle and COFI
Assuming the 90 days trading horizon Mantle is expected to generate 1.54 times more return on investment than COFI. However, Mantle is 1.54 times more volatile than COFI. It trades about 0.28 of its potential returns per unit of risk. COFI is currently generating about -0.18 per unit of risk. If you would invest 60.00 in Mantle on August 30, 2024 and sell it today you would earn a total of 27.00 from holding Mantle or generate 45.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mantle vs. COFI
Performance |
| Timeline |
| Mantle |
| COFI |
Mantle and COFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mantle and COFI
The main advantage of trading using opposite Mantle and COFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mantle position performs unexpectedly, COFI 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 COFI will offset losses from the drop in COFI's long position.The idea behind Mantle and COFI 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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