Correlation Between Uniswap Protocol and GAIA

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

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

Diversification Opportunities for Uniswap Protocol and GAIA

-0.27

Correlation Coefficient

Uniswap Protocol  GAIA

Very good diversification

The 3 months correlation between Uniswap and GAIA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and GAIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAIA and Uniswap Protocol 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 Uniswap Protocol Token are associated (or correlated) with GAIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAIA has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and GAIA go up and down completely randomly.

Pair Corralation between Uniswap Protocol and GAIA

Assuming the 90 days trading horizon Uniswap Protocol Token is expected to generate 0.68 times more return on investment than GAIA. However, Uniswap Protocol Token is 1.48 times less risky than GAIA. It trades about 0.23 of its potential returns per unit of risk. GAIA is currently generating about -0.04 per unit of risk. If you would invest  595.00  in Uniswap Protocol Token on August 30, 2024 and sell it today you would earn a total of  723.00  from holding Uniswap Protocol Token or generate 121.51% return on investment over 90 days.

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

Uniswap Protocol Token  vs.  GAIA

Uniswap Protocol Token

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Uniswap Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

GAIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAIA 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 December 2024. The latest tumult may also be a sign of longer-term up-swing for GAIA shareholders.

Pair Trading with Uniswap Protocol and GAIA

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

The idea behind Uniswap Protocol Token and GAIA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.