Correlation Between Tezos and BNT

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

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

Diversification Opportunities for Tezos and BNT

0.96

Correlation Coefficient

Tezos  BNT

Almost no diversification

The 3 months correlation between Tezos and BNT is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Tezos and BNT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNT and Tezos 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 Tezos are associated (or correlated) with BNT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNT has no effect on the direction of Tezos i.e., Tezos and BNT go up and down completely randomly.

Pair Corralation between Tezos and BNT

Assuming the 90 days trading horizon Tezos is expected to under-perform the BNT. But the crypto coin apears to be less risky and, when comparing its historical volatility, Tezos is 1.04 times less risky than BNT. The crypto coin trades about -0.2 of its potential returns per unit of risk. The BNT is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  65.00  in BNT on December 29, 2024 and sell it today you would lose (23.00) from holding BNT or give up 35.38% of portfolio value over 90 days.

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

Tezos  vs.  BNT

Tezos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tezos 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 basic 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 Tezos shareholders.

BNT

Risk-Adjusted Performance

Very Weak

Over the last 90 days BNT 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 basic 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 BNT shareholders.

Pair Trading with Tezos and BNT

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

The idea behind Tezos and BNT 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.