Correlation Between Cardano and NewFunds TRACI

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

By analyzing existing cross correlation between Cardano and NewFunds TRACI 3, you can compare the effects of market volatilities on Cardano and NewFunds TRACI 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 NewFunds TRACI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and NewFunds TRACI.

Diversification Opportunities for Cardano and NewFunds TRACI

0.57

Correlation Coefficient

Cardano  NewFunds TRACI

Very weak diversification

The 3 months correlation between Cardano and NewFunds is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and NewFunds TRACI 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFunds TRACI 3 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 NewFunds TRACI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFunds TRACI 3 has no effect on the direction of Cardano i.e., Cardano and NewFunds TRACI go up and down completely randomly.

Pair Corralation between Cardano and NewFunds TRACI

Assuming the 90 days trading horizon Cardano is expected to generate 17.2 times more return on investment than NewFunds TRACI. However, Cardano is 17.2 times more volatile than NewFunds TRACI 3. It trades about 0.14 of its potential returns per unit of risk. NewFunds TRACI 3 is currently generating about 0.09 per unit of risk. If you would invest  40.00  in Cardano on October 25, 2024 and sell it today you would earn a total of  58.00  from holding Cardano or generate 145.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.06%
Values	Daily Returns

Cardano  vs.  NewFunds TRACI 3

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.

NewFunds TRACI 3

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NewFunds TRACI 3 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NewFunds TRACI is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardano and NewFunds TRACI

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

The idea behind Cardano and NewFunds TRACI 3 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 Transaction History module to view history of all your transactions and understand their impact on performance.