Correlation Between MONA and XMX

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

By analyzing existing cross correlation between MONA and XMX, you can compare the effects of market volatilities on MONA and XMX 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 XMX. Check out your portfolio center. Please also check ongoing floating volatility patterns of MONA and XMX.

Diversification Opportunities for MONA and XMX

0.85

Correlation Coefficient

MONA  XMX

Very poor diversification

The 3 months correlation between MONA and XMX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MONA and XMX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMX 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 XMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMX has no effect on the direction of MONA i.e., MONA and XMX go up and down completely randomly.

Pair Corralation between MONA and XMX

Assuming the 90 days trading horizon MONA is expected to under-perform the XMX. But the crypto coin apears to be less risky and, when comparing its historical volatility, MONA is 1.44 times less risky than XMX. The crypto coin trades about -0.11 of its potential returns per unit of risk. The XMX is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  0.00  in XMX on January 20, 2024 and sell it today you would lose  0.00  from holding XMX or give up 5.56% of portfolio value over 90 days.

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

MONA  vs.  XMX

MONA

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MONA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, MONA may actually be approaching a critical reversion point that can send shares even higher in May 2024.

XMX

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with MONA and XMX

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

The idea behind MONA and XMX 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.