Correlation Between MANTRA and EOSDAC

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

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

Diversification Opportunities for MANTRA and EOSDAC

0.3

Correlation Coefficient

MANTRA  EOSDAC

Weak diversification

The 3 months correlation between MANTRA and EOSDAC is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MANTRA and EOSDAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOSDAC and MANTRA 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 MANTRA are associated (or correlated) with EOSDAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOSDAC has no effect on the direction of MANTRA i.e., MANTRA and EOSDAC go up and down completely randomly.

Pair Corralation between MANTRA and EOSDAC

Assuming the 90 days horizon MANTRA is expected to generate 2.15 times more return on investment than EOSDAC. However, MANTRA is 2.15 times more volatile than EOSDAC. It trades about 0.09 of its potential returns per unit of risk. EOSDAC is currently generating about 0.09 per unit of risk. If you would invest  4.28  in MANTRA on October 26, 2024 and sell it today you would earn a total of  344.72  from holding MANTRA or generate 8054.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.1%
Values	Daily Returns

MANTRA  vs.  EOSDAC

MANTRA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MANTRA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, MANTRA exhibited solid returns over the last few months and may actually be approaching a breakup point.

EOSDAC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EOSDAC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, EOSDAC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MANTRA and EOSDAC

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

The idea behind MANTRA and EOSDAC 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.