Correlation Between MANTRA and THENA
Can any of the company-specific risk be diversified away by investing in both MANTRA and THENA 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 MANTRA and THENA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MANTRA and THENA, you can compare the effects of market volatilities on MANTRA and THENA 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 MANTRA with a short position of THENA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MANTRA and THENA.
Diversification Opportunities for MANTRA and THENA
Poor diversification
The 3 months correlation between MANTRA and THENA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MANTRA and THENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THENA and MANTRA 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 MANTRA are associated (or correlated) with THENA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THENA has no effect on the direction of MANTRA i.e., MANTRA and THENA go up and down completely randomly.
Pair Corralation between MANTRA and THENA
Assuming the 90 days horizon MANTRA is expected to generate 52.59 times less return on investment than THENA. But when comparing it to its historical volatility, MANTRA is 9.68 times less risky than THENA. It trades about 0.01 of its potential returns per unit of risk. THENA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 102.00 in THENA on October 26, 2024 and sell it today you would lose (19.00) from holding THENA or give up 18.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MANTRA vs. THENA
Performance |
| Timeline |
| MANTRA |
| THENA |
MANTRA and THENA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MANTRA and THENA
The main advantage of trading using opposite MANTRA and THENA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MANTRA position performs unexpectedly, THENA 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 THENA will offset losses from the drop in THENA's long position.The idea behind MANTRA and THENA 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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