Correlation Between Curve DAO and MONA

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

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

Diversification Opportunities for Curve DAO and MONA

0.71

Correlation Coefficient

Curve DAO  MONA

Poor diversification

The 3 months correlation between Curve and MONA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Curve DAO Token and MONA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONA and Curve DAO 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 Curve DAO Token are associated (or correlated) with MONA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONA has no effect on the direction of Curve DAO i.e., Curve DAO and MONA go up and down completely randomly.

Pair Corralation between Curve DAO and MONA

Assuming the 90 days trading horizon Curve DAO Token is expected to generate 1.44 times more return on investment than MONA. However, Curve DAO is 1.44 times more volatile than MONA. It trades about 0.18 of its potential returns per unit of risk. MONA is currently generating about 0.08 per unit of risk. If you would invest  28.00  in Curve DAO Token on August 30, 2024 and sell it today you would earn a total of  23.00  from holding Curve DAO Token or generate 82.14% return on investment over 90 days.

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

Curve DAO Token  vs.  MONA

Curve DAO Token

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Curve DAO Token are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Curve DAO exhibited solid returns over the last few months and may actually be approaching a breakup point.

MONA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MONA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, MONA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Curve DAO and MONA

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

The idea behind Curve DAO Token and MONA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.