Correlation Between Lido DAO and Immutable

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

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

Diversification Opportunities for Lido DAO and Immutable

0.81

Correlation Coefficient

Lido DAO  Immutable

Very poor diversification

The 3 months correlation between Lido and Immutable is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lido DAO and Immutable X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immutable X and Lido DAO 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 Lido DAO are associated (or correlated) with Immutable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immutable X has no effect on the direction of Lido DAO i.e., Lido DAO and Immutable go up and down completely randomly.

Pair Corralation between Lido DAO and Immutable

Assuming the 90 days trading horizon Lido DAO is expected to generate 1.17 times more return on investment than Immutable. However, Lido DAO is 1.17 times more volatile than Immutable X. It trades about -0.11 of its potential returns per unit of risk. Immutable X is currently generating about -0.18 per unit of risk. If you would invest  174.00  in Lido DAO on December 30, 2024 and sell it today you would lose (87.00) from holding Lido DAO or give up 50.0% of portfolio value over 90 days.

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

Lido DAO  vs.  Immutable X

Lido DAO

Risk-Adjusted Performance

Very Weak

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

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for Immutable X shareholders.

Pair Trading with Lido DAO and Immutable

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

The idea behind Lido DAO and Immutable X 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.