Correlation Between MNW and Ontology

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Can any of the company-specific risk be diversified away by investing in both MNW and Ontology 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 MNW and Ontology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MNW and Ontology, you can compare the effects of market volatilities on MNW and Ontology 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 MNW with a short position of Ontology. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNW and Ontology.

Diversification Opportunities for MNW and Ontology

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between MNW and Ontology is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding MNW and Ontology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontology and MNW 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 MNW are associated (or correlated) with Ontology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontology has no effect on the direction of MNW i.e., MNW and Ontology go up and down completely randomly.

Pair Corralation between MNW and Ontology

Assuming the 90 days trading horizon MNW is expected to generate 29.69 times more return on investment than Ontology. However, MNW is 29.69 times more volatile than Ontology. It trades about 0.18 of its potential returns per unit of risk. Ontology is currently generating about 0.14 per unit of risk. If you would invest  35.00  in MNW on August 23, 2024 and sell it today you would lose (2.00) from holding MNW or give up 5.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MNW  vs.  Ontology

 Performance 
       Timeline  
MNW 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in MNW are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MNW exhibited solid returns over the last few months and may actually be approaching a breakup point.
Ontology 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ontology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ontology exhibited solid returns over the last few months and may actually be approaching a breakup point.

MNW and Ontology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MNW and Ontology

The main advantage of trading using opposite MNW and Ontology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MNW position performs unexpectedly, Ontology 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 Ontology will offset losses from the drop in Ontology's long position.
The idea behind MNW and Ontology 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.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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