Correlation Between MNW and DigiByte

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

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

Diversification Opportunities for MNW and DigiByte

0.56

Correlation Coefficient

MNW  DigiByte

Very weak diversification

The 3 months correlation between MNW and DigiByte is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MNW and DigiByte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiByte and MNW 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 MNW are associated (or correlated) with DigiByte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiByte has no effect on the direction of MNW i.e., MNW and DigiByte go up and down completely randomly.

Pair Corralation between MNW and DigiByte

Assuming the 90 days trading horizon MNW is expected to generate 20.45 times more return on investment than DigiByte. However, MNW is 20.45 times more volatile than DigiByte. It trades about 0.15 of its potential returns per unit of risk. DigiByte is currently generating about 0.21 per unit of risk. If you would invest  41.00  in MNW on September 1, 2024 and sell it today you would lose (1.00) from holding MNW or give up 2.44% of portfolio value over 90 days.

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

MNW  vs.  DigiByte

MNW

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MNW are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MNW exhibited solid returns over the last few months and may actually be approaching a breakup point.

DigiByte

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DigiByte are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, DigiByte exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MNW and DigiByte

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

The idea behind MNW and DigiByte 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.