Correlation Between Wormhole and Nano

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

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

Diversification Opportunities for Wormhole and Nano

0.6

Correlation Coefficient

Wormhole  Nano

Poor diversification

The 3 months correlation between Wormhole and Nano is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Wormhole and Nano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano and Wormhole 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 Wormhole are associated (or correlated) with Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano has no effect on the direction of Wormhole i.e., Wormhole and Nano go up and down completely randomly.

Pair Corralation between Wormhole and Nano

Given the investment horizon of 90 days Wormhole is expected to under-perform the Nano. But the crypto coin apears to be less risky and, when comparing its historical volatility, Wormhole is 1.13 times less risky than Nano. The crypto coin trades about -0.24 of its potential returns per unit of risk. The Nano is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Nano on December 29, 2024 and sell it today you would lose (33.00) from holding Nano or give up 26.4% of portfolio value over 90 days.

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

Wormhole  vs.  Nano

Wormhole

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wormhole 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 Wormhole shareholders.

Nano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano 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 Nano shareholders.

Pair Trading with Wormhole and Nano

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

The idea behind Wormhole and Nano 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.