Correlation Between Cardano and Pax Core

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

By analyzing existing cross correlation between Cardano and Pax E Bond, you can compare the effects of market volatilities on Cardano and Pax Core 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 Pax Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Pax Core.

Diversification Opportunities for Cardano and Pax Core

-0.19

Correlation Coefficient

Cardano  Pax Core

Good diversification

The 3 months correlation between Cardano and Pax is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Pax E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax E Bond 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 Pax Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax E Bond has no effect on the direction of Cardano i.e., Cardano and Pax Core go up and down completely randomly.

Pair Corralation between Cardano and Pax Core

Assuming the 90 days trading horizon Cardano is expected to under-perform the Pax Core. In addition to that, Cardano is 26.84 times more volatile than Pax E Bond. It trades about -0.12 of its total potential returns per unit of risk. Pax E Bond is currently generating about -0.46 per unit of volatility. If you would invest  884.00  in Pax E Bond on October 12, 2024 and sell it today you would lose (20.00) from holding Pax E Bond or give up 2.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Cardano  vs.  Pax E Bond

Cardano

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 18 (%) 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.

Pax E Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pax E Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Pax Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardano and Pax Core

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

The idea behind Cardano and Pax E Bond 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.