Correlation Between Open Network and MCO
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By analyzing existing cross correlation between The Open Network and MCO, you can compare the effects of market volatilities on Open Network and MCO 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 Open Network with a short position of MCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Network and MCO.
Diversification Opportunities for Open Network and MCO
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Open and MCO is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Open Network and MCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCO and Open Network 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 The Open Network are associated (or correlated) with MCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCO has no effect on the direction of Open Network i.e., Open Network and MCO go up and down completely randomly.
Pair Corralation between Open Network and MCO
Assuming the 90 days trading horizon Open Network is expected to generate 121.98 times less return on investment than MCO. But when comparing it to its historical volatility, The Open Network is 32.24 times less risky than MCO. It trades about 0.06 of its potential returns per unit of risk. MCO is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 85.00 in MCO on January 29, 2024 and sell it today you would earn a total of 1,240 from holding MCO or generate 1458.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Open Network vs. MCO
Performance |
Timeline |
Open Network |
MCO |
Open Network and MCO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Open Network and MCO
The main advantage of trading using opposite Open Network and MCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Network position performs unexpectedly, MCO 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 MCO will offset losses from the drop in MCO's long position.The idea behind The Open Network and MCO 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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