Correlation Between Applied Digital and Mentor Capital
Can any of the company-specific risk be diversified away by investing in both Applied Digital and Mentor Capital 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 Applied Digital and Mentor Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Digital and Mentor Capital, you can compare the effects of market volatilities on Applied Digital and Mentor Capital 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 Applied Digital with a short position of Mentor Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Mentor Capital.
Diversification Opportunities for Applied Digital and Mentor Capital
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Applied and Mentor is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Mentor Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mentor Capital and Applied Digital 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 Applied Digital are associated (or correlated) with Mentor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mentor Capital has no effect on the direction of Applied Digital i.e., Applied Digital and Mentor Capital go up and down completely randomly.
Pair Corralation between Applied Digital and Mentor Capital
Given the investment horizon of 90 days Applied Digital is expected to generate 1.04 times more return on investment than Mentor Capital. However, Applied Digital is 1.04 times more volatile than Mentor Capital. It trades about 0.05 of its potential returns per unit of risk. Mentor Capital is currently generating about -0.07 per unit of risk. If you would invest 780.00 in Applied Digital on December 3, 2024 and sell it today you would earn a total of 20.00 from holding Applied Digital or generate 2.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Applied Digital vs. Mentor Capital
Performance |
Timeline |
Applied Digital |
Mentor Capital |
Applied Digital and Mentor Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Applied Digital and Mentor Capital
The main advantage of trading using opposite Applied Digital and Mentor Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Digital position performs unexpectedly, Mentor Capital 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 Mentor Capital will offset losses from the drop in Mentor Capital's long position.Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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