Correlation Between MOON and Defiance Next

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

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

Diversification Opportunities for MOON and Defiance Next

0.0

Correlation Coefficient

MOON  Defiance Next

Pay attention - limited upside

The 3 months correlation between MOON and Defiance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MOON and Defiance Next Gen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance Next Gen and MOON 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 MOON are associated (or correlated) with Defiance Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance Next Gen has no effect on the direction of MOON i.e., MOON and Defiance Next go up and down completely randomly.

Pair Corralation between MOON and Defiance Next

If you would invest (100.00) in MOON on December 30, 2024 and sell it today you would earn a total of  100.00  from holding MOON or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MOON  vs.  Defiance Next Gen

MOON

Risk-Adjusted Performance

Very Weak

Over the last 90 days MOON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MOON is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Defiance Next Gen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Defiance Next Gen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with MOON and Defiance Next

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

The idea behind MOON and Defiance Next Gen 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.