Correlation Between CARV and EOSDAC

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

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

Diversification Opportunities for CARV and EOSDAC

0.83

Correlation Coefficient

CARV  EOSDAC

Very poor diversification

The 3 months correlation between CARV and EOSDAC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CARV and EOSDAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOSDAC and CARV 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 CARV are associated (or correlated) with EOSDAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOSDAC has no effect on the direction of CARV i.e., CARV and EOSDAC go up and down completely randomly.

Pair Corralation between CARV and EOSDAC

Assuming the 90 days trading horizon CARV is expected to under-perform the EOSDAC. In addition to that, CARV is 1.33 times more volatile than EOSDAC. It trades about -0.12 of its total potential returns per unit of risk. EOSDAC is currently generating about -0.08 per unit of volatility. If you would invest  0.03  in EOSDAC on December 23, 2024 and sell it today you would lose (0.01) from holding EOSDAC or give up 42.98% of portfolio value over 90 days.

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

CARV  vs.  EOSDAC

CARV

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for CARV shareholders.

EOSDAC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EOSDAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for EOSDAC investors.

Pair Trading with CARV and EOSDAC

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

The idea behind CARV and EOSDAC 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.