Correlation Between EGold and MNW
Can any of the company-specific risk be diversified away by investing in both EGold and MNW 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 EGold and MNW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eGold and MNW, you can compare the effects of market volatilities on EGold and MNW 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 EGold with a short position of MNW. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGold and MNW.
Diversification Opportunities for EGold and MNW
Very poor diversification
The 3 months correlation between EGold and MNW is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding eGold and MNW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MNW and EGold 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 eGold are associated (or correlated) with MNW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MNW has no effect on the direction of EGold i.e., EGold and MNW go up and down completely randomly.
Pair Corralation between EGold and MNW
Assuming the 90 days trading horizon eGold is expected to under-perform the MNW. But the crypto coin apears to be less risky and, when comparing its historical volatility, eGold is 1.1 times less risky than MNW. The crypto coin trades about -0.2 of its potential returns per unit of risk. The MNW is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 112.00 in MNW on January 30, 2024 and sell it today you would lose (21.00) from holding MNW or give up 18.75% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
eGold vs. MNW
Performance |
Timeline |
eGold |
MNW |
EGold and MNW Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EGold and MNW
The main advantage of trading using opposite EGold and MNW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGold position performs unexpectedly, MNW 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 MNW will offset losses from the drop in MNW's long position.The idea behind eGold and MNW 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories |