Correlation Between Theta Network and Theta Fuel

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

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

Diversification Opportunities for Theta Network and Theta Fuel

0.94

Correlation Coefficient

Theta Network  Theta Fuel

Almost no diversification

The 3 months correlation between Theta and Theta is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Theta Network and Theta Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Fuel and Theta Network 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 Network are associated (or correlated) with Theta Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Fuel has no effect on the direction of Theta Network i.e., Theta Network and Theta Fuel go up and down completely randomly.

Pair Corralation between Theta Network and Theta Fuel

Assuming the 90 days trading horizon Theta Network is expected to generate 1.38 times more return on investment than Theta Fuel. However, Theta Network is 1.38 times more volatile than Theta Fuel. It trades about 0.65 of its potential returns per unit of risk. Theta Fuel is currently generating about 0.51 per unit of risk. If you would invest  109.00  in Theta Network on September 2, 2024 and sell it today you would earn a total of  200.00  from holding Theta Network or generate 183.49% return on investment over 90 days.

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

Theta Network  vs.  Theta Fuel

Theta Network

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Theta Network are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Theta Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Theta Fuel

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Theta Fuel are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Theta Fuel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Theta Network and Theta Fuel

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

The idea behind Theta Network and Theta Fuel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.