Correlation Between Toncoin and WXT

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

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

Diversification Opportunities for Toncoin and WXT

0.57

Correlation Coefficient

Toncoin  WXT

Very weak diversification

The 3 months correlation between Toncoin and WXT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and WXT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WXT and Toncoin 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 Toncoin are associated (or correlated) with WXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WXT has no effect on the direction of Toncoin i.e., Toncoin and WXT go up and down completely randomly.

Pair Corralation between Toncoin and WXT

Assuming the 90 days trading horizon Toncoin is expected to generate 0.81 times more return on investment than WXT. However, Toncoin is 1.23 times less risky than WXT. It trades about 0.15 of its potential returns per unit of risk. WXT is currently generating about -0.11 per unit of risk. If you would invest  466.00  in Toncoin on September 3, 2024 and sell it today you would earn a total of  190.00  from holding Toncoin or generate 40.77% return on investment over 90 days.

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

Toncoin  vs.  WXT

Toncoin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Toncoin are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Toncoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

WXT

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days WXT 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for WXT shareholders.

Pair Trading with Toncoin and WXT

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

The idea behind Toncoin and WXT 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.