Correlation Between SMART and Monero

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

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

Diversification Opportunities for SMART and Monero

0.7

Correlation Coefficient

SMART  Monero

Poor diversification

The 3 months correlation between SMART and Monero is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SMART and Monero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monero and SMART 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 SMART are associated (or correlated) with Monero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monero has no effect on the direction of SMART i.e., SMART and Monero go up and down completely randomly.

Pair Corralation between SMART and Monero

Assuming the 90 days trading horizon SMART is expected to under-perform the Monero. But the crypto coin apears to be less risky and, when comparing its historical volatility, SMART is 1.09 times less risky than Monero. The crypto coin trades about -0.16 of its potential returns per unit of risk. The Monero is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  17,954  in Monero on October 9, 2024 and sell it today you would earn a total of  1,376  from holding Monero or generate 7.66% return on investment over 90 days.

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

SMART  vs.  Monero

SMART

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SMART are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SMART exhibited solid returns over the last few months and may actually be approaching a breakup point.

Monero

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with SMART and Monero

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

The idea behind SMART and Monero 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.