Correlation Between Maverick Protocol and LRN

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

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

Diversification Opportunities for Maverick Protocol and LRN

-0.23

Correlation Coefficient

Maverick Protocol  LRN

Very good diversification

The 3 months correlation between Maverick and LRN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Maverick Protocol and LRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LRN 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 LRN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LRN has no effect on the direction of Maverick Protocol i.e., Maverick Protocol and LRN go up and down completely randomly.

Pair Corralation between Maverick Protocol and LRN

Assuming the 90 days trading horizon Maverick Protocol is expected to generate 2.61 times less return on investment than LRN. But when comparing it to its historical volatility, Maverick Protocol is 2.51 times less risky than LRN. It trades about 0.12 of its potential returns per unit of risk. LRN is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.15  in LRN on September 1, 2024 and sell it today you would earn a total of  0.10  from holding LRN or generate 67.98% return on investment over 90 days.

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

Maverick Protocol  vs.  LRN

Maverick Protocol

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maverick Protocol are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Maverick Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

LRN

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LRN are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, LRN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maverick Protocol and LRN

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

The idea behind Maverick Protocol and LRN 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.