Correlation Between MONA and MLN

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

Diversification Opportunities for MONA and MLN

MONAMLNDiversified AwayMONAMLNDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between MONA and MLN is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MONA and MLN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLN 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 MLN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MLN has no effect on the direction of MONA i.e., MONA and MLN go up and down completely randomly.

Pair Corralation between MONA and MLN

Assuming the 90 days trading horizon MONA is expected to generate 1.11 times more return on investment than MLN. However, MONA is 1.11 times more volatile than MLN. It trades about -0.05 of its potential returns per unit of risk. MLN is currently generating about -0.21 per unit of risk. If you would invest  27.00  in MONA on November 23, 2024 and sell it today you would lose (2.00) from holding MONA or give up 7.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

MONA  vs.  MLN

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -200204060
JavaScript chart by amCharts 3.21.15MONA MLN
       Timeline  
MONA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MONA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for MONA shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.250.30.350.4
MLN 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MLN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for MLN shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1214161820222426

MONA and MLN Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.11-5.33-3.54-1.76-0.02981.653.385.116.858.58 0.0150.0160.0170.0180.0190.020
JavaScript chart by amCharts 3.21.15MONA MLN
       Returns  

Pair Trading with MONA and MLN

The main advantage of trading using opposite MONA and MLN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MONA position performs unexpectedly, MLN 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 MLN will offset losses from the drop in MLN's long position.
The idea behind MONA and MLN 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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