Correlation Between LayerZero and DUSK

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

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

Diversification Opportunities for LayerZero and DUSK

0.94

Correlation Coefficient

LayerZero  DUSK

Almost no diversification

The 3 months correlation between LayerZero and DUSK is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding LayerZero and DUSK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUSK and LayerZero 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 LayerZero are associated (or correlated) with DUSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUSK has no effect on the direction of LayerZero i.e., LayerZero and DUSK go up and down completely randomly.

Pair Corralation between LayerZero and DUSK

Assuming the 90 days trading horizon LayerZero is expected to generate 1.19 times more return on investment than DUSK. However, LayerZero is 1.19 times more volatile than DUSK. It trades about -0.09 of its potential returns per unit of risk. DUSK is currently generating about -0.23 per unit of risk. If you would invest  500.00  in LayerZero on December 30, 2024 and sell it today you would lose (246.00) from holding LayerZero or give up 49.2% of portfolio value over 90 days.

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

LayerZero  vs.  DUSK

LayerZero

Risk-Adjusted Performance

Very Weak

Over the last 90 days LayerZero 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 LayerZero shareholders.

DUSK

Risk-Adjusted Performance

Very Weak

Over the last 90 days DUSK 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 DUSK shareholders.

Pair Trading with LayerZero and DUSK

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

The idea behind LayerZero and DUSK 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.