Correlation Between MONA and Horizen

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

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

Diversification Opportunities for MONA and Horizen

0.75

Correlation Coefficient

MONA  Horizen

Poor diversification

The 3 months correlation between MONA and Horizen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MONA and Horizen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizen 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 Horizen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizen has no effect on the direction of MONA i.e., MONA and Horizen go up and down completely randomly.

Pair Corralation between MONA and Horizen

Assuming the 90 days trading horizon MONA is expected to generate 4.62 times less return on investment than Horizen. But when comparing it to its historical volatility, MONA is 1.57 times less risky than Horizen. It trades about 0.08 of its potential returns per unit of risk. Horizen is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  737.00  in Horizen on September 3, 2024 and sell it today you would earn a total of  1,093  from holding Horizen or generate 148.3% return on investment over 90 days.

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

MONA  vs.  Horizen

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.

Horizen

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizen are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Horizen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MONA and Horizen

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

The idea behind MONA and Horizen 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.