Correlation Between Convex Finance and Maker

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

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

Diversification Opportunities for Convex Finance and Maker

0.5

Correlation Coefficient

Convex Finance  Maker

Very weak diversification

The 3 months correlation between Convex and Maker is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Convex Finance and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker 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 Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of Convex Finance i.e., Convex Finance and Maker go up and down completely randomly.

Pair Corralation between Convex Finance and Maker

Assuming the 90 days trading horizon Convex Finance is expected to under-perform the Maker. In addition to that, Convex Finance is 1.26 times more volatile than Maker. It trades about -0.11 of its total potential returns per unit of risk. Maker is currently generating about 0.0 per unit of volatility. If you would invest  149,147  in Maker on December 29, 2024 and sell it today you would lose (20,078) from holding Maker or give up 13.46% of portfolio value over 90 days.

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

Convex Finance  vs.  Maker

Convex Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Convex Finance 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 Convex Finance shareholders.

Maker

Risk-Adjusted Performance

Weak

Over the last 90 days Maker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Maker is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Convex Finance and Maker

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

The idea behind Convex Finance and Maker 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.