Correlation Between Wormhole and MLN

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

Diversification Opportunities for Wormhole and MLN

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Wormhole and MLN is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Wormhole and MLN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLN and Wormhole 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 Wormhole 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 Wormhole i.e., Wormhole and MLN go up and down completely randomly.

Pair Corralation between Wormhole and MLN

Given the investment horizon of 90 days Wormhole is expected to under-perform the MLN. In addition to that, Wormhole is 1.69 times more volatile than MLN. It trades about -0.26 of its total potential returns per unit of risk. MLN is currently generating about -0.35 per unit of volatility. If you would invest  1,830  in MLN on November 8, 2024 and sell it today you would lose (552.00) from holding MLN or give up 30.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Wormhole  vs.  MLN

 Performance 
       Timeline  
Wormhole 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wormhole 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 fundamental 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 Wormhole shareholders.
MLN 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
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.

Wormhole and MLN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wormhole and MLN

The main advantage of trading using opposite Wormhole and MLN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wormhole 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 Wormhole 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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