Correlation Between Immutable and Polkadot

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

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

Diversification Opportunities for Immutable and Polkadot

0.99

Correlation Coefficient

Immutable  Polkadot

No risk reduction

The 3 months correlation between Immutable and Polkadot is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Immutable X and Polkadot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polkadot and Immutable 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 Immutable X are associated (or correlated) with Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polkadot has no effect on the direction of Immutable i.e., Immutable and Polkadot go up and down completely randomly.

Pair Corralation between Immutable and Polkadot

Assuming the 90 days trading horizon Immutable X is expected to under-perform the Polkadot. But the crypto coin apears to be less risky and, when comparing its historical volatility, Immutable X is 1.0 times less risky than Polkadot. The crypto coin trades about -0.23 of its potential returns per unit of risk. The Polkadot is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  903.00  in Polkadot on November 28, 2024 and sell it today you would lose (436.00) from holding Polkadot or give up 48.28% of portfolio value over 90 days.

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

Immutable X  vs.  Polkadot

Immutable X

Risk-Adjusted Performance

Very Weak

Over the last 90 days Immutable X 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 basic 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 Immutable X shareholders.

Polkadot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polkadot 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 basic 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 Polkadot shareholders.

Pair Trading with Immutable and Polkadot

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

The idea behind Immutable X and Polkadot 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.