Correlation Between SPACE and T Rex

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

By analyzing existing cross correlation between SPACE and T Rex 2X Long, you can compare the effects of market volatilities on SPACE and T Rex 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 SPACE with a short position of T Rex. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and T Rex.

Diversification Opportunities for SPACE and T Rex

0.84

Correlation Coefficient

SPACE  T Rex

Very poor diversification

The 3 months correlation between SPACE and NVDX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and T Rex 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rex 2X and SPACE 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 SPACE are associated (or correlated) with T Rex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rex 2X has no effect on the direction of SPACE i.e., SPACE and T Rex go up and down completely randomly.

Pair Corralation between SPACE and T Rex

Assuming the 90 days horizon SPACE is expected to under-perform the T Rex. But the crypto coin apears to be less risky and, when comparing its historical volatility, SPACE is 1.3 times less risky than T Rex. The crypto coin trades about -0.11 of its potential returns per unit of risk. The T Rex 2X Long is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,474  in T Rex 2X Long on December 28, 2024 and sell it today you would lose (653.00) from holding T Rex 2X Long or give up 44.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.83%
Values	Daily Returns

SPACE  vs.  T Rex 2X Long

SPACE

Risk-Adjusted Performance

Very Weak

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

T Rex 2X

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly 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 the ETF investors.

Pair Trading with SPACE and T Rex

The main advantage of trading using opposite SPACE and T Rex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, T Rex 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 T Rex will offset losses from the drop in T Rex's long position.

The idea behind SPACE and T Rex 2X Long 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.