Correlation Between MLN and Storj

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

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

Diversification Opportunities for MLN and Storj

0.46

Correlation Coefficient

MLN  Storj

Very weak diversification

The 3 months correlation between MLN and Storj is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MLN and Storj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storj and MLN 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 MLN are associated (or correlated) with Storj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storj has no effect on the direction of MLN i.e., MLN and Storj go up and down completely randomly.

Pair Corralation between MLN and Storj

Assuming the 90 days trading horizon MLN is expected to generate 0.77 times more return on investment than Storj. However, MLN is 1.29 times less risky than Storj. It trades about -0.06 of its potential returns per unit of risk. Storj is currently generating about -0.2 per unit of risk. If you would invest  2,579  in MLN on January 23, 2024 and sell it today you would lose (231.00) from holding MLN or give up 8.96% of portfolio value over 90 days.

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

MLN  vs.  Storj

MLN

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MLN are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MLN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Storj

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Storj are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking indicators, Storj exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MLN and Storj

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

The idea behind MLN and Storj 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.