Correlation Between Dogecoin and Loopring

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

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

Diversification Opportunities for Dogecoin and Loopring

0.7

Correlation Coefficient

Dogecoin  Loopring

Poor diversification

The 3 months correlation between Dogecoin and Loopring is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dogecoin and Loopring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loopring and Dogecoin 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 Dogecoin are associated (or correlated) with Loopring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loopring has no effect on the direction of Dogecoin i.e., Dogecoin and Loopring go up and down completely randomly.

Pair Corralation between Dogecoin and Loopring

Assuming the 90 days trading horizon Dogecoin is expected to under-perform the Loopring. But the crypto coin apears to be less risky and, when comparing its historical volatility, Dogecoin is 1.21 times less risky than Loopring. The crypto coin trades about -0.16 of its potential returns per unit of risk. The Loopring is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Loopring on November 28, 2024 and sell it today you would lose (12.00) from holding Loopring or give up 50.0% of portfolio value over 90 days.

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

Dogecoin  vs.  Loopring

Dogecoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dogecoin 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 March 2025. The latest tumult may also be a sign of longer-term up-swing for Dogecoin shareholders.

Loopring

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loopring 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 March 2025. The latest tumult may also be a sign of longer-term up-swing for Loopring shareholders.

Pair Trading with Dogecoin and Loopring

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

The idea behind Dogecoin and Loopring 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.