Correlation Between Maverick Protocol and Ontology

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

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

Diversification Opportunities for Maverick Protocol and Ontology

-0.43

Correlation Coefficient

Maverick Protocol  Ontology

Very good diversification

The 3 months correlation between Maverick and Ontology is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maverick Protocol and Ontology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontology and Maverick Protocol 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 Maverick Protocol are associated (or correlated) with Ontology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontology has no effect on the direction of Maverick Protocol i.e., Maverick Protocol and Ontology go up and down completely randomly.

Pair Corralation between Maverick Protocol and Ontology

Assuming the 90 days trading horizon Maverick Protocol is expected to under-perform the Ontology. But the crypto coin apears to be less risky and, when comparing its historical volatility, Maverick Protocol is 1.29 times less risky than Ontology. The crypto coin trades about -0.33 of its potential returns per unit of risk. The Ontology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Ontology on January 30, 2024 and sell it today you would earn a total of  5.00  from holding Ontology or generate 16.13% return on investment over 90 days.

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

Maverick Protocol  vs.  Ontology

Maverick Protocol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maverick Protocol 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 Maverick Protocol shareholders.

Ontology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ontology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ontology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maverick Protocol and Ontology

The main advantage of trading using opposite Maverick Protocol and Ontology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maverick Protocol position performs unexpectedly, Ontology 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 Ontology will offset losses from the drop in Ontology's long position.

The idea behind Maverick Protocol and Ontology 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.