Correlation Between Stellar and IExec

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

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

Diversification Opportunities for Stellar and IExec

0.82

Correlation Coefficient

Stellar  IExec

Very poor diversification

The 3 months correlation between Stellar and IExec is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and iExec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iExec and Stellar 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 Stellar are associated (or correlated) with IExec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iExec has no effect on the direction of Stellar i.e., Stellar and IExec go up and down completely randomly.

Pair Corralation between Stellar and IExec

Assuming the 90 days trading horizon Stellar is expected to generate 1.05 times more return on investment than IExec. However, Stellar is 1.05 times more volatile than iExec. It trades about -0.02 of its potential returns per unit of risk. iExec is currently generating about -0.12 per unit of risk. If you would invest  33.00  in Stellar on December 30, 2024 and sell it today you would lose (6.00) from holding Stellar or give up 18.18% of portfolio value over 90 days.

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

Stellar  vs.  iExec

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Stellar shareholders.

iExec

Risk-Adjusted Performance

Very Weak

Over the last 90 days iExec 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 iExec shareholders.

Pair Trading with Stellar and IExec

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

The idea behind Stellar and iExec 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.