Correlation Between MONA and Maker
Can any of the company-specific risk be diversified away by investing in both MONA and Maker 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 Maker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MONA and Maker, you can compare the effects of market volatilities on MONA and Maker 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 Maker. Check out your portfolio center. Please also check ongoing floating volatility patterns of MONA and Maker.
Diversification Opportunities for MONA and Maker
Weak diversification
The 3 months correlation between MONA and Maker is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MONA and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker 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 Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of MONA i.e., MONA and Maker go up and down completely randomly.
Pair Corralation between MONA and Maker
Assuming the 90 days trading horizon MONA is expected to under-perform the Maker. But the crypto coin apears to be less risky and, when comparing its historical volatility, MONA is 1.64 times less risky than Maker. The crypto coin trades about -0.11 of its potential returns per unit of risk. The Maker is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 321,532 in Maker on January 24, 2024 and sell it today you would lose (39,568) from holding Maker or give up 12.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MONA vs. Maker
Performance |
| Timeline |
| MONA |
| Maker |
MONA and Maker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MONA and Maker
The main advantage of trading using opposite MONA and Maker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MONA position performs unexpectedly, Maker 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 Maker will offset losses from the drop in Maker's long position.The idea behind MONA and Maker 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |