Correlation Between Drift Protocol and STEPN
Can any of the company-specific risk be diversified away by investing in both Drift Protocol and STEPN 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 Drift Protocol and STEPN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Drift protocol and STEPN, you can compare the effects of market volatilities on Drift Protocol and STEPN 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 Drift Protocol with a short position of STEPN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Drift Protocol and STEPN.
Diversification Opportunities for Drift Protocol and STEPN
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Drift and STEPN is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Drift protocol and STEPN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEPN and Drift Protocol 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 Drift protocol are associated (or correlated) with STEPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEPN has no effect on the direction of Drift Protocol i.e., Drift Protocol and STEPN go up and down completely randomly.
Pair Corralation between Drift Protocol and STEPN
Assuming the 90 days trading horizon Drift protocol is expected to generate 1.06 times more return on investment than STEPN. However, Drift Protocol is 1.06 times more volatile than STEPN. It trades about -0.18 of its potential returns per unit of risk. STEPN is currently generating about -0.26 per unit of risk. If you would invest 136.00 in Drift protocol on December 30, 2024 and sell it today you would lose (79.00) from holding Drift protocol or give up 58.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Drift protocol vs. STEPN
Performance |
Timeline |
Drift protocol |
STEPN |
Drift Protocol and STEPN Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Drift Protocol and STEPN
The main advantage of trading using opposite Drift Protocol and STEPN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Drift Protocol position performs unexpectedly, STEPN 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 STEPN will offset losses from the drop in STEPN's long position.Drift Protocol vs. Staked Ether | Drift Protocol vs. Phala Network | Drift Protocol vs. EigenLayer | Drift Protocol vs. EOSDAC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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