Correlation Between Curve DAO and Tezos

Can any of the company-specific risk be diversified away by investing in both Curve DAO and Tezos 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 Tezos 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 Tezos, you can compare the effects of market volatilities on Curve DAO and Tezos 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 Tezos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curve DAO and Tezos.

Diversification Opportunities for Curve DAO and Tezos

0.97

Correlation Coefficient

Curve DAO  Tezos

Almost no diversification

The 3 months correlation between Curve and Tezos is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Curve DAO Token and Tezos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tezos 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 Tezos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tezos has no effect on the direction of Curve DAO i.e., Curve DAO and Tezos go up and down completely randomly.

Pair Corralation between Curve DAO and Tezos

Assuming the 90 days trading horizon Curve DAO Token is expected to generate 1.65 times more return on investment than Tezos. However, Curve DAO is 1.65 times more volatile than Tezos. It trades about -0.09 of its potential returns per unit of risk. Tezos is currently generating about -0.22 per unit of risk. If you would invest  89.00  in Curve DAO Token on December 29, 2024 and sell it today you would lose (40.00) from holding Curve DAO Token or give up 44.94% of portfolio value over 90 days.

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

Curve DAO Token  vs.  Tezos

Curve DAO Token

Risk-Adjusted Performance

Very Weak

Over the last 90 days Curve DAO Token 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 basic 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 Curve DAO Token shareholders.

Tezos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tezos 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 basic 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 Tezos shareholders.

Pair Trading with Curve DAO and Tezos

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

The idea behind Curve DAO Token and Tezos 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.