Correlation Between Siren Nasdaq and Fidelity Crypto

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

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

Diversification Opportunities for Siren Nasdaq and Fidelity Crypto

0.96

Correlation Coefficient

Siren Nasdaq  Fidelity Crypto

Almost no diversification

The 3 months correlation between Siren and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Siren Nasdaq NexGen and Fidelity Crypto Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Crypto Industry and Siren Nasdaq 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 Siren Nasdaq NexGen are associated (or correlated) with Fidelity Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Crypto Industry has no effect on the direction of Siren Nasdaq i.e., Siren Nasdaq and Fidelity Crypto go up and down completely randomly.

Pair Corralation between Siren Nasdaq and Fidelity Crypto

Given the investment horizon of 90 days Siren Nasdaq is expected to generate 2.31 times less return on investment than Fidelity Crypto. But when comparing it to its historical volatility, Siren Nasdaq NexGen is 1.64 times less risky than Fidelity Crypto. It trades about 0.14 of its potential returns per unit of risk. Fidelity Crypto Industry is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,492  in Fidelity Crypto Industry on September 3, 2024 and sell it today you would earn a total of  1,523  from holding Fidelity Crypto Industry or generate 61.12% return on investment over 90 days.

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

Siren Nasdaq NexGen  vs.  Fidelity Crypto Industry

Siren Nasdaq NexGen

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siren Nasdaq NexGen are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Siren Nasdaq displayed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Crypto Industry

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Crypto Industry are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Fidelity Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siren Nasdaq and Fidelity Crypto

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

The idea behind Siren Nasdaq NexGen and Fidelity Crypto Industry 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.