Correlation Between Mantle and SPACE
Can any of the company-specific risk be diversified away by investing in both Mantle and SPACE 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 SPACE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mantle and SPACE, you can compare the effects of market volatilities on Mantle and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mantle and SPACE.
Diversification Opportunities for Mantle and SPACE
Very weak diversification
The 3 months correlation between Mantle and SPACE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Mantle i.e., Mantle and SPACE go up and down completely randomly.
Pair Corralation between Mantle and SPACE
Assuming the 90 days trading horizon Mantle is expected to under-perform the SPACE. In addition to that, Mantle is 1.22 times more volatile than SPACE. It trades about -0.02 of its total potential returns per unit of risk. SPACE is currently generating about -0.02 per unit of volatility. If you would invest 71.00 in SPACE on October 7, 2024 and sell it today you would lose (24.00) from holding SPACE or give up 33.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.68% |
| Values | Daily Returns |
Mantle vs. SPACE
Performance |
| Timeline |
| Mantle |
| SPACE |
Mantle and SPACE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mantle and SPACE
The main advantage of trading using opposite Mantle and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mantle position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE's long position.The idea behind Mantle and SPACE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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