Correlation Between E For and Mono Next

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

By analyzing existing cross correlation between E for L and Mono Next Public, you can compare the effects of market volatilities on E For and Mono Next 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 E For with a short position of Mono Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of E For and Mono Next.

Diversification Opportunities for E For and Mono Next

0.49

Correlation Coefficient

E For  Mono Next

Very weak diversification

The 3 months correlation between EFORL and Mono is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding E for L and Mono Next Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mono Next Public and E For 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 E for L are associated (or correlated) with Mono Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mono Next Public has no effect on the direction of E For i.e., E For and Mono Next go up and down completely randomly.

Pair Corralation between E For and Mono Next

Assuming the 90 days trading horizon E for L is expected to under-perform the Mono Next. But the stock apears to be less risky and, when comparing its historical volatility, E for L is 1.29 times less risky than Mono Next. The stock trades about -0.19 of its potential returns per unit of risk. The Mono Next Public is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  206.00  in Mono Next Public on December 29, 2024 and sell it today you would lose (76.00) from holding Mono Next Public or give up 36.89% of portfolio value over 90 days.

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

E for L  vs.  Mono Next Public

E for L

Risk-Adjusted Performance

Very Weak

Over the last 90 days E for L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Mono Next Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mono Next Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with E For and Mono Next

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

The idea behind E for L and Mono Next Public 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.