Correlation Between MONA and DGTX
Can any of the company-specific risk be diversified away by investing in both MONA and DGTX 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 MONA and DGTX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MONA and DGTX, you can compare the effects of market volatilities on MONA and DGTX 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 MONA with a short position of DGTX. Check out your portfolio center. Please also check ongoing floating volatility patterns of MONA and DGTX.
Diversification Opportunities for MONA and DGTX
Good diversification
The 3 months correlation between MONA and DGTX is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding MONA and DGTX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTX and MONA 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 MONA are associated (or correlated) with DGTX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTX has no effect on the direction of MONA i.e., MONA and DGTX go up and down completely randomly.
Pair Corralation between MONA and DGTX
Assuming the 90 days trading horizon MONA is expected to generate 0.49 times more return on investment than DGTX. However, MONA is 2.04 times less risky than DGTX. It trades about 0.15 of its potential returns per unit of risk. DGTX is currently generating about -0.07 per unit of risk. If you would invest 25.00 in MONA on August 23, 2024 and sell it today you would earn a total of 5.00 from holding MONA or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MONA vs. DGTX
Performance |
| Timeline |
| MONA |
| DGTX |
MONA and DGTX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MONA and DGTX
The main advantage of trading using opposite MONA and DGTX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MONA position performs unexpectedly, DGTX 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 DGTX will offset losses from the drop in DGTX's long position.The idea behind MONA and DGTX 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance |