Correlation Between Morpho and Magic Eden

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

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

Diversification Opportunities for Morpho and Magic Eden

0.93

Correlation Coefficient

Morpho  Magic Eden

Almost no diversification

The 3 months correlation between Morpho and Magic is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Morpho and Magic Eden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Eden and Morpho 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 Morpho are associated (or correlated) with Magic Eden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Eden has no effect on the direction of Morpho i.e., Morpho and Magic Eden go up and down completely randomly.

Pair Corralation between Morpho and Magic Eden

Assuming the 90 days trading horizon Morpho is expected to generate 0.99 times more return on investment than Magic Eden. However, Morpho is 1.01 times less risky than Magic Eden. It trades about 0.13 of its potential returns per unit of risk. Magic Eden is currently generating about 0.11 per unit of risk. If you would invest  0.00  in Morpho on October 24, 2024 and sell it today you would earn a total of  331.00  from holding Morpho or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Morpho  vs.  Magic Eden

Morpho

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morpho are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Morpho sustained solid returns over the last few months and may actually be approaching a breakup point.

Magic Eden

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Eden are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Magic Eden exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morpho and Magic Eden

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

The idea behind Morpho and Magic Eden 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.