Correlation Between Yearnfinance and Maker

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

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

Diversification Opportunities for Yearnfinance and Maker

0.8

Correlation Coefficient

Yearnfinance  Maker

Very poor diversification

The 3 months correlation between Yearnfinance and Maker is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding yearnfinance and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker and Yearnfinance 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 yearnfinance are associated (or correlated) with Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of Yearnfinance i.e., Yearnfinance and Maker go up and down completely randomly.

Pair Corralation between Yearnfinance and Maker

Assuming the 90 days trading horizon yearnfinance is expected to generate 1.09 times more return on investment than Maker. However, Yearnfinance is 1.09 times more volatile than Maker. It trades about 0.03 of its potential returns per unit of risk. Maker is currently generating about -0.07 per unit of risk. If you would invest  608,651  in yearnfinance on November 19, 2024 and sell it today you would lose (10,874) from holding yearnfinance or give up 1.79% of portfolio value over 90 days.

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

yearnfinance  vs.  Maker

yearnfinance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in yearnfinance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Yearnfinance may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Maker

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Yearnfinance and Maker

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

The idea behind yearnfinance and Maker 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.