Correlation Between MNW and REDLANG
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By analyzing existing cross correlation between MNW and REDLANG, you can compare the effects of market volatilities on MNW and REDLANG 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 REDLANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MNW and REDLANG.
Diversification Opportunities for MNW and REDLANG
Very weak diversification
The 3 months correlation between MNW and REDLANG is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MNW and REDLANG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDLANG 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 REDLANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDLANG has no effect on the direction of MNW i.e., MNW and REDLANG go up and down completely randomly.
Pair Corralation between MNW and REDLANG
Assuming the 90 days trading horizon MNW is expected to generate 35.36 times more return on investment than REDLANG. However, MNW is 35.36 times more volatile than REDLANG. It trades about 0.27 of its potential returns per unit of risk. REDLANG is currently generating about 0.22 per unit of risk. If you would invest 29.00 in MNW on September 4, 2024 and sell it today you would earn a total of 29.00 from holding MNW or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MNW vs. REDLANG
Performance |
| Timeline |
| MNW |
| REDLANG |
MNW and REDLANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MNW and REDLANG
The main advantage of trading using opposite MNW and REDLANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MNW position performs unexpectedly, REDLANG 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 REDLANG will offset losses from the drop in REDLANG's long position.The idea behind MNW and REDLANG 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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