Correlation Between Cardano and Tangerine Balanced

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

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

Diversification Opportunities for Cardano and Tangerine Balanced

0.7

Correlation Coefficient

Cardano  Tangerine Balanced

Poor diversification

The 3 months correlation between Cardano and Tangerine is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Tangerine Balanced Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Balanced Growth and Cardano 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 Cardano are associated (or correlated) with Tangerine Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Balanced Growth has no effect on the direction of Cardano i.e., Cardano and Tangerine Balanced go up and down completely randomly.

Pair Corralation between Cardano and Tangerine Balanced

Assuming the 90 days trading horizon Cardano is expected to generate 16.43 times more return on investment than Tangerine Balanced. However, Cardano is 16.43 times more volatile than Tangerine Balanced Growth. It trades about 0.29 of its potential returns per unit of risk. Tangerine Balanced Growth is currently generating about 0.04 per unit of risk. If you would invest  34.00  in Cardano on October 9, 2024 and sell it today you would earn a total of  75.00  from holding Cardano or generate 220.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.65%
Values	Daily Returns

Cardano  vs.  Tangerine Balanced Growth

Cardano

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tangerine Balanced Growth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Balanced Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Tangerine Balanced is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardano and Tangerine Balanced

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

The idea behind Cardano and Tangerine Balanced Growth 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.