Correlation Between Velo and Worldcoin

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

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

Diversification Opportunities for Velo and Worldcoin

0.93

Correlation Coefficient

Velo  Worldcoin

Almost no diversification

The 3 months correlation between Velo and Worldcoin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Velo and Worldcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldcoin and Velo 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 Velo are associated (or correlated) with Worldcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldcoin has no effect on the direction of Velo i.e., Velo and Worldcoin go up and down completely randomly.

Pair Corralation between Velo and Worldcoin

Assuming the 90 days trading horizon Velo is expected to generate 1.16 times more return on investment than Worldcoin. However, Velo is 1.16 times more volatile than Worldcoin. It trades about -0.1 of its potential returns per unit of risk. Worldcoin is currently generating about -0.19 per unit of risk. If you would invest  2.47  in Velo on December 30, 2024 and sell it today you would lose (1.22) from holding Velo or give up 49.39% of portfolio value over 90 days.

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

Velo  vs.  Worldcoin

Velo

Risk-Adjusted Performance

Very Weak

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

Worldcoin

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Velo and Worldcoin

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

The idea behind Velo and Worldcoin 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.