Correlation Between MTL and Band Protocol

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

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

Diversification Opportunities for MTL and Band Protocol

0.75

Correlation Coefficient

MTL  Band Protocol

Poor diversification

The 12 months correlation between MTL and Band is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MTL and Band Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Band Protocol and MTL 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 MTL are associated (or correlated) with Band Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Band Protocol has no effect on the direction of MTL i.e., MTL and Band Protocol go up and down completely randomly.

Pair Corralation between MTL and Band Protocol

Assuming the 90 days trading horizon MTL is expected to generate 1.09 times more return on investment than Band Protocol. However, MTL is 1.09 times more volatile than Band Protocol. It trades about 0.05 of its potential returns per unit of risk. Band Protocol is currently generating about -0.04 per unit of risk. If you would invest  162.00  in MTL on January 24, 2024 and sell it today you would earn a total of  5.00  from holding MTL or generate 3.09% return on investment over 90 days.

Time Period	12 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MTL  vs.  Band Protocol

MTL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MTL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, MTL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Band Protocol

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Band Protocol are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Band Protocol may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with MTL and Band Protocol

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

The idea behind MTL and Band Protocol 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.