Correlation Between Mantle and Polygon

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

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

Diversification Opportunities for Mantle and Polygon

0.27

Correlation Coefficient

Mantle  Polygon

Modest diversification

The 3 months correlation between Mantle and Polygon is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mantle and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon 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 Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of Mantle i.e., Mantle and Polygon go up and down completely randomly.

Pair Corralation between Mantle and Polygon

Assuming the 90 days trading horizon Mantle is expected to generate 0.9 times more return on investment than Polygon. However, Mantle is 1.12 times less risky than Polygon. It trades about 0.0 of its potential returns per unit of risk. Polygon is currently generating about -0.16 per unit of risk. If you would invest  88.00  in Mantle on November 28, 2024 and sell it today you would lose (8.00) from holding Mantle or give up 9.09% of portfolio value over 90 days.

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

Mantle  vs.  Polygon

Mantle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mantle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mantle is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Polygon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polygon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Polygon shareholders.

Pair Trading with Mantle and Polygon

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

The idea behind Mantle and Polygon 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.