Correlation Between Mantle and IQN

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

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

Diversification Opportunities for Mantle and IQN

0.9

Correlation Coefficient

Mantle  IQN

Almost no diversification

The 3 months correlation between Mantle and IQN is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and IQN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQN and Mantle 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 Mantle are associated (or correlated) with IQN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQN has no effect on the direction of Mantle i.e., Mantle and IQN go up and down completely randomly.

Pair Corralation between Mantle and IQN

Assuming the 90 days trading horizon Mantle is expected to generate 1.28 times less return on investment than IQN. In addition to that, Mantle is 1.05 times more volatile than IQN. It trades about 0.14 of its total potential returns per unit of risk. IQN is currently generating about 0.19 per unit of volatility. If you would invest  18.00  in IQN on August 30, 2024 and sell it today you would earn a total of  11.00  from holding IQN or generate 61.11% return on investment over 90 days.

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

Mantle  vs.  IQN

Mantle

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mantle are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Mantle sustained solid returns over the last few months and may actually be approaching a breakup point.

IQN

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IQN are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, IQN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mantle and IQN

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

The idea behind Mantle and IQN 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.