Correlation Between Theta Fuel and Theta Network

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

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

Diversification Opportunities for Theta Fuel and Theta Network

0.99

Correlation Coefficient

Theta Fuel  Theta Network

No risk reduction

The 3 months correlation between Theta and Theta is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Theta Fuel and Theta Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Network and Theta Fuel 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 Theta Fuel are associated (or correlated) with Theta Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Network has no effect on the direction of Theta Fuel i.e., Theta Fuel and Theta Network go up and down completely randomly.

Pair Corralation between Theta Fuel and Theta Network

Assuming the 90 days trading horizon Theta Fuel is expected to generate 0.74 times more return on investment than Theta Network. However, Theta Fuel is 1.34 times less risky than Theta Network. It trades about -0.19 of its potential returns per unit of risk. Theta Network is currently generating about -0.24 per unit of risk. If you would invest  6.26  in Theta Fuel on December 30, 2024 and sell it today you would lose (2.71) from holding Theta Fuel or give up 43.29% of portfolio value over 90 days.

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

Theta Fuel  vs.  Theta Network

Theta Fuel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Theta Fuel 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 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 Theta Fuel shareholders.

Theta Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Theta Network 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 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 Theta Network shareholders.

Pair Trading with Theta Fuel and Theta Network

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

The idea behind Theta Fuel and Theta Network 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.