Correlation Between RENBTC and Stellar

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

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

Diversification Opportunities for RENBTC and Stellar

0.0

Correlation Coefficient

RENBTC  Stellar

Pay attention - limited upside

The 3 months correlation between RENBTC and Stellar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RENBTC and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar and RENBTC 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 RENBTC are associated (or correlated) with Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of RENBTC i.e., RENBTC and Stellar go up and down completely randomly.

Pair Corralation between RENBTC and Stellar

If you would invest  12.00  in Stellar on September 13, 2024 and sell it today you would earn a total of  32.00  from holding Stellar or generate 266.67% return on investment over 90 days.

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

RENBTC  vs.  Stellar

RENBTC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RENBTC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RENBTC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RENBTC and Stellar

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

The idea behind RENBTC and Stellar 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.