Correlation Between Uniswap Protocol and YAM

Can any of the company-specific risk be diversified away by investing in both Uniswap Protocol and YAM 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 YAM 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 YAM, you can compare the effects of market volatilities on Uniswap Protocol and YAM 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 YAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniswap Protocol and YAM.

Diversification Opportunities for Uniswap Protocol and YAM

-0.36

Correlation Coefficient

Uniswap Protocol  YAM

Very good diversification

The 3 months correlation between Uniswap and YAM is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and YAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAM 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 YAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAM has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and YAM go up and down completely randomly.

Pair Corralation between Uniswap Protocol and YAM

Assuming the 90 days trading horizon Uniswap Protocol Token is expected to generate 1.29 times more return on investment than YAM. However, Uniswap Protocol is 1.29 times more volatile than YAM. It trades about 0.21 of its potential returns per unit of risk. YAM is currently generating about -0.02 per unit of risk. If you would invest  604.00  in Uniswap Protocol Token on September 1, 2024 and sell it today you would earn a total of  675.00  from holding Uniswap Protocol Token or generate 111.75% 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.  YAM

Uniswap Protocol Token

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 16 (%) 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.

YAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days YAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, YAM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Uniswap Protocol and YAM

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

The idea behind Uniswap Protocol Token and YAM 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.