Correlation Between Drift Protocol and Raydium

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

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

Diversification Opportunities for Drift Protocol and Raydium

0.83

Correlation Coefficient

Drift Protocol  Raydium

Very poor diversification

The 3 months correlation between Drift and Raydium is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Drift protocol and Raydium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raydium 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 Raydium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raydium has no effect on the direction of Drift Protocol i.e., Drift Protocol and Raydium go up and down completely randomly.

Pair Corralation between Drift Protocol and Raydium

Assuming the 90 days trading horizon Drift protocol is expected to generate 3.07 times more return on investment than Raydium. However, Drift Protocol is 3.07 times more volatile than Raydium. It trades about 0.13 of its potential returns per unit of risk. Raydium is currently generating about 0.3 per unit of risk. If you would invest  48.00  in Drift protocol on September 1, 2024 and sell it today you would earn a total of  94.00  from holding Drift protocol or generate 195.83% return on investment over 90 days.

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

Drift protocol  vs.  Raydium

Drift protocol

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Drift protocol are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Drift Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Raydium

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raydium are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Raydium exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Drift Protocol and Raydium

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

The idea behind Drift protocol and Raydium 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 Commodity Directory module to find actively traded commodities issued by global exchanges.