Correlation Between Cardano and Social Leverage

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

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

Diversification Opportunities for Cardano and Social Leverage

0.72

Correlation Coefficient

Cardano  Social Leverage

Poor diversification

The 3 months correlation between Cardano and Social is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Social Leverage Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Leverage Acqu 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 Social Leverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Leverage Acqu has no effect on the direction of Cardano i.e., Cardano and Social Leverage go up and down completely randomly.

Pair Corralation between Cardano and Social Leverage

Assuming the 90 days trading horizon Cardano is expected to generate 3.91 times less return on investment than Social Leverage. But when comparing it to its historical volatility, Cardano is 2.99 times less risky than Social Leverage. It trades about 0.09 of its potential returns per unit of risk. Social Leverage Acquisition is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9.46  in Social Leverage Acquisition on October 10, 2024 and sell it today you would earn a total of  4.54  from holding Social Leverage Acquisition or generate 47.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	32.0%
Values	Daily Returns

Cardano  vs.  Social Leverage Acquisition

Cardano

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 20 (%) 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.

Social Leverage Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Social Leverage Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Social Leverage is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cardano and Social Leverage

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

The idea behind Cardano and Social Leverage Acquisition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.