Correlation Between MONA and DODO
Can any of the company-specific risk be diversified away by investing in both MONA and DODO 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 DODO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MONA and DODO, you can compare the effects of market volatilities on MONA and DODO 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 DODO. Check out your portfolio center. Please also check ongoing floating volatility patterns of MONA and DODO.
Diversification Opportunities for MONA and DODO
Very poor diversification
The 3 months correlation between MONA and DODO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MONA and DODO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DODO 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 DODO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DODO has no effect on the direction of MONA i.e., MONA and DODO go up and down completely randomly.
Pair Corralation between MONA and DODO
Assuming the 90 days trading horizon MONA is expected to under-perform the DODO. But the crypto coin apears to be less risky and, when comparing its historical volatility, MONA is 1.53 times less risky than DODO. The crypto coin trades about -0.01 of its potential returns per unit of risk. The DODO is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 29.00 in DODO on January 25, 2024 and sell it today you would lose (10.00) from holding DODO or give up 34.48% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
MONA vs. DODO
Performance |
Timeline |
MONA |
DODO |
MONA and DODO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MONA and DODO
The main advantage of trading using opposite MONA and DODO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MONA position performs unexpectedly, DODO 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 DODO will offset losses from the drop in DODO's long position.The idea behind MONA and DODO 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |