Correlation Between TRON and REX FANG

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

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

Diversification Opportunities for TRON and REX FANG

0.54

Correlation Coefficient

TRON  REX FANG

Very weak diversification

The 3 months correlation between TRON and REX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding TRON and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation and TRON 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 TRON are associated (or correlated) with REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of TRON i.e., TRON and REX FANG go up and down completely randomly.

Pair Corralation between TRON and REX FANG

Assuming the 90 days trading horizon TRON is expected to generate 17.63 times more return on investment than REX FANG. However, TRON is 17.63 times more volatile than REX FANG Innovation. It trades about 0.09 of its potential returns per unit of risk. REX FANG Innovation is currently generating about 0.04 per unit of risk. If you would invest  19.00  in TRON on October 26, 2024 and sell it today you would earn a total of  6.00  from holding TRON or generate 31.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.7%
Values	Daily Returns

TRON  vs.  REX FANG Innovation

TRON

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

REX FANG Innovation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in REX FANG Innovation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, REX FANG is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with TRON and REX FANG

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

The idea behind TRON and REX FANG Innovation 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.