Correlation Between MONA and Venus

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

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

Diversification Opportunities for MONA and Venus

0.59

Correlation Coefficient

MONA  Venus

Very weak diversification

The 3 months correlation between MONA and Venus is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MONA and Venus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus and MONA 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 MONA are associated (or correlated) with Venus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus has no effect on the direction of MONA i.e., MONA and Venus go up and down completely randomly.

Pair Corralation between MONA and Venus

Assuming the 90 days trading horizon MONA is expected to under-perform the Venus. But the crypto coin apears to be less risky and, when comparing its historical volatility, MONA is 1.94 times less risky than Venus. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Venus is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  546.00  in Venus on January 30, 2024 and sell it today you would earn a total of  477.00  from holding Venus or generate 87.36% return on investment over 90 days.

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

MONA  vs.  Venus

MONA

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days MONA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MONA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Venus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Venus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Venus is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MONA and Venus

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

The idea behind MONA and Venus 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.