Correlation Between Ontology and IOTA

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

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

Diversification Opportunities for Ontology and IOTA

0.8

Correlation Coefficient

Ontology  IOTA

Very poor diversification

The 3 months correlation between Ontology and IOTA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ontology and IOTA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOTA and Ontology 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 Ontology are associated (or correlated) with IOTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOTA has no effect on the direction of Ontology i.e., Ontology and IOTA go up and down completely randomly.

Pair Corralation between Ontology and IOTA

Assuming the 90 days trading horizon Ontology is expected to generate 1.44 times more return on investment than IOTA. However, Ontology is 1.44 times more volatile than IOTA. It trades about 0.05 of its potential returns per unit of risk. IOTA is currently generating about -0.23 per unit of risk. If you would invest  33.00  in Ontology on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Ontology or generate 0.0% return on investment over 90 days.

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

Ontology  vs.  IOTA

Ontology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ontology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ontology exhibited solid returns over the last few months and may actually be approaching a breakup point.

IOTA

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Ontology and IOTA

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

The idea behind Ontology and IOTA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.