Correlation Between Curve DAO and WGRT

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

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

Diversification Opportunities for Curve DAO and WGRT

-0.09

Correlation Coefficient

Curve DAO  WGRT

Good diversification

The 3 months correlation between Curve and WGRT is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Curve DAO Token and WGRT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WGRT and Curve DAO 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 Curve DAO Token are associated (or correlated) with WGRT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WGRT has no effect on the direction of Curve DAO i.e., Curve DAO and WGRT go up and down completely randomly.

Pair Corralation between Curve DAO and WGRT

Assuming the 90 days trading horizon Curve DAO Token is expected to generate 0.15 times more return on investment than WGRT. However, Curve DAO Token is 6.49 times less risky than WGRT. It trades about 0.18 of its potential returns per unit of risk. WGRT is currently generating about 0.01 per unit of risk. If you would invest  28.00  in Curve DAO Token on August 30, 2024 and sell it today you would earn a total of  23.00  from holding Curve DAO Token or generate 82.14% return on investment over 90 days.

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

Curve DAO Token  vs.  WGRT

Curve DAO Token

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Curve DAO Token are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Curve DAO exhibited solid returns over the last few months and may actually be approaching a breakup point.

WGRT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WGRT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady fundamental indicators, WGRT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Curve DAO and WGRT

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

The idea behind Curve DAO Token and WGRT 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.