Correlation Between Convex Finance and Chiliz

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

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

Diversification Opportunities for Convex Finance and Chiliz

0.64

Correlation Coefficient

Convex Finance  Chiliz

Poor diversification

The 3 months correlation between Convex and Chiliz is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Convex Finance and Chiliz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiliz and Convex Finance 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 Convex Finance are associated (or correlated) with Chiliz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiliz has no effect on the direction of Convex Finance i.e., Convex Finance and Chiliz go up and down completely randomly.

Pair Corralation between Convex Finance and Chiliz

Assuming the 90 days trading horizon Convex Finance is expected to generate 1.45 times more return on investment than Chiliz. However, Convex Finance is 1.45 times more volatile than Chiliz. It trades about 0.17 of its potential returns per unit of risk. Chiliz is currently generating about 0.24 per unit of risk. If you would invest  201.00  in Convex Finance on September 1, 2024 and sell it today you would earn a total of  173.00  from holding Convex Finance or generate 86.07% return on investment over 90 days.

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

Convex Finance  vs.  Chiliz

Convex Finance

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Convex Finance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Convex Finance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chiliz

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chiliz are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Chiliz exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Convex Finance and Chiliz

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

The idea behind Convex Finance and Chiliz 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.