Correlation Between Stacks and Stargate Finance

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

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

Diversification Opportunities for Stacks and Stargate Finance

0.97

Correlation Coefficient

Stacks  Stargate Finance

Almost no diversification

The 3 months correlation between Stacks and Stargate is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Stacks and Stargate Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stargate Finance and Stacks 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 Stacks are associated (or correlated) with Stargate Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stargate Finance has no effect on the direction of Stacks i.e., Stacks and Stargate Finance go up and down completely randomly.

Pair Corralation between Stacks and Stargate Finance

Assuming the 90 days trading horizon Stacks is expected to under-perform the Stargate Finance. In addition to that, Stacks is 1.12 times more volatile than Stargate Finance. It trades about -0.2 of its total potential returns per unit of risk. Stargate Finance is currently generating about -0.15 per unit of volatility. If you would invest  37.00  in Stargate Finance on December 30, 2024 and sell it today you would lose (17.00) from holding Stargate Finance or give up 45.95% of portfolio value over 90 days.

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

Stacks  vs.  Stargate Finance

Stacks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stacks 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 Stacks shareholders.

Stargate Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stargate Finance 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 technical and fundamental 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 Stargate Finance shareholders.

Pair Trading with Stacks and Stargate Finance

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

The idea behind Stacks and Stargate Finance 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.