Correlation Between Mantle and REPO

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

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

Diversification Opportunities for Mantle and REPO

0.9

Correlation Coefficient

Mantle  REPO

Almost no diversification

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

Pair Corralation between Mantle and REPO

Assuming the 90 days trading horizon Mantle is expected to generate 1.22 times less return on investment than REPO. In addition to that, Mantle is 1.2 times more volatile than REPO. It trades about 0.14 of its total potential returns per unit of risk. REPO is currently generating about 0.21 per unit of volatility. If you would invest  22.00  in REPO on August 30, 2024 and sell it today you would earn a total of  13.00  from holding REPO or generate 59.09% 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.  REPO

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.

REPO

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in REPO are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, REPO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mantle and REPO

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

The idea behind Mantle and REPO 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.