Correlation Between Mantle and OriginTrail
Can any of the company-specific risk be diversified away by investing in both Mantle and OriginTrail 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 OriginTrail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mantle and OriginTrail, you can compare the effects of market volatilities on Mantle and OriginTrail 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 OriginTrail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mantle and OriginTrail.
Diversification Opportunities for Mantle and OriginTrail
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mantle and OriginTrail is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and OriginTrail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginTrail 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 OriginTrail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginTrail has no effect on the direction of Mantle i.e., Mantle and OriginTrail go up and down completely randomly.
Pair Corralation between Mantle and OriginTrail
Assuming the 90 days trading horizon Mantle is expected to generate 2.15 times less return on investment than OriginTrail. But when comparing it to its historical volatility, Mantle is 1.42 times less risky than OriginTrail. It trades about 0.23 of its potential returns per unit of risk. OriginTrail is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 50.00 in OriginTrail on August 24, 2024 and sell it today you would earn a total of 40.00 from holding OriginTrail or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mantle vs. OriginTrail
Performance |
| Timeline |
| Mantle |
| OriginTrail |
Mantle and OriginTrail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mantle and OriginTrail
The main advantage of trading using opposite Mantle and OriginTrail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mantle position performs unexpectedly, OriginTrail 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 OriginTrail will offset losses from the drop in OriginTrail's long position.The idea behind Mantle and OriginTrail 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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