Correlation Between Maverick Protocol and GAIA

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

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

Diversification Opportunities for Maverick Protocol and GAIA

-0.09

Correlation Coefficient

Maverick Protocol  GAIA

Good diversification

The 3 months correlation between Maverick and GAIA is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Maverick Protocol and GAIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAIA and Maverick 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 Maverick Protocol are associated (or correlated) with GAIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAIA has no effect on the direction of Maverick Protocol i.e., Maverick Protocol and GAIA go up and down completely randomly.

Pair Corralation between Maverick Protocol and GAIA

Assuming the 90 days trading horizon Maverick Protocol is expected to under-perform the GAIA. But the crypto coin apears to be less risky and, when comparing its historical volatility, Maverick Protocol is 1.2 times less risky than GAIA. The crypto coin trades about -0.19 of its potential returns per unit of risk. The GAIA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.20  in GAIA on November 27, 2024 and sell it today you would lose  0.00  from holding GAIA or give up 0.05% of portfolio value over 90 days.

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

Maverick Protocol  vs.  GAIA

Maverick Protocol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maverick Protocol 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 Maverick Protocol shareholders.

GAIA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GAIA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, GAIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maverick Protocol and GAIA

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

The idea behind Maverick Protocol and GAIA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..