Correlation Between GRIN and MCO

Can any of the company-specific risk be diversified away by investing in both GRIN and MCO 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 GRIN and MCO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRIN and MCO, you can compare the effects of market volatilities on GRIN 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 GRIN with a short position of MCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRIN and MCO.

Diversification Opportunities for GRIN and MCO

-0.21

Correlation Coefficient

GRIN  MCO

Very good diversification

The 3 months correlation between GRIN and MCO is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding GRIN and MCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCO and GRIN 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 GRIN 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 GRIN i.e., GRIN and MCO go up and down completely randomly.

Pair Corralation between GRIN and MCO

Assuming the 90 days trading horizon GRIN is expected to under-perform the MCO. But the crypto coin apears to be less risky and, when comparing its historical volatility, GRIN is 42.15 times less risky than MCO. The crypto coin trades about -0.14 of its potential returns per unit of risk. The MCO is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  84.00  in MCO on January 26, 2024 and sell it today you would earn a total of  1,241  from holding MCO or generate 1477.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GRIN  vs.  MCO

GRIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRIN 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 May 2024. The latest tumult may also be a sign of longer-term up-swing for GRIN shareholders.

MCO

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCO are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MCO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GRIN and MCO

The main advantage of trading using opposite GRIN and MCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRIN 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 GRIN 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.