Correlation Between EOSDAC and IQN

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

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

Diversification Opportunities for EOSDAC and IQN

0.79

Correlation Coefficient

EOSDAC  IQN

Poor diversification

The 3 months correlation between EOSDAC and IQN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and IQN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQN and EOSDAC 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 EOSDAC are associated (or correlated) with IQN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQN has no effect on the direction of EOSDAC i.e., EOSDAC and IQN go up and down completely randomly.

Pair Corralation between EOSDAC and IQN

Assuming the 90 days trading horizon EOSDAC is expected to under-perform the IQN. In addition to that, EOSDAC is 2.9 times more volatile than IQN. It trades about -0.07 of its total potential returns per unit of risk. IQN is currently generating about -0.03 per unit of volatility. If you would invest  28.00  in IQN on December 29, 2024 and sell it today you would lose (2.00) from holding IQN or give up 7.14% of portfolio value over 90 days.

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

EOSDAC  vs.  IQN

EOSDAC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EOSDAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for EOSDAC investors.

IQN

Risk-Adjusted Performance

Very Weak

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

Pair Trading with EOSDAC and IQN

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

The idea behind EOSDAC and IQN 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.