Correlation Between Metalpha Technology and New York

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

By analyzing existing cross correlation between Metalpha Technology Holding and New York City, you can compare the effects of market volatilities on Metalpha Technology and New York 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 Metalpha Technology with a short position of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalpha Technology and New York.

Diversification Opportunities for Metalpha Technology and New York

0.79

Correlation Coefficient

Metalpha Technology  New York

Poor diversification

The 3 months correlation between Metalpha and New is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Metalpha Technology Holding and New York City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New York City and Metalpha Technology 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 Metalpha Technology Holding are associated (or correlated) with New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New York City has no effect on the direction of Metalpha Technology i.e., Metalpha Technology and New York go up and down completely randomly.

Pair Corralation between Metalpha Technology and New York

Given the investment horizon of 90 days Metalpha Technology Holding is expected to generate 2.38 times more return on investment than New York. However, Metalpha Technology is 2.38 times more volatile than New York City. It trades about 0.14 of its potential returns per unit of risk. New York City is currently generating about 0.09 per unit of risk. If you would invest  111.00  in Metalpha Technology Holding on December 28, 2024 and sell it today you would earn a total of  71.00  from holding Metalpha Technology Holding or generate 63.96% return on investment over 90 days.

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

Metalpha Technology Holding  vs.  New York City

Metalpha Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metalpha Technology Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Metalpha Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

New York City

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New York City are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, New York exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalpha Technology and New York

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

The idea behind Metalpha Technology Holding and New York City 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.