Correlation Between Alpaca Finance and BakeryToken

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Can any of the company-specific risk be diversified away by investing in both Alpaca Finance and BakeryToken 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 Alpaca Finance and BakeryToken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpaca Finance and BakeryToken, you can compare the effects of market volatilities on Alpaca Finance and BakeryToken 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 Alpaca Finance with a short position of BakeryToken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpaca Finance and BakeryToken.

Diversification Opportunities for Alpaca Finance and BakeryToken

0.93
  Correlation Coefficient

Almost no diversification

The 1 month correlation between Alpaca and BakeryToken is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alpaca Finance and BakeryToken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BakeryToken and Alpaca Finance 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 Alpaca Finance are associated (or correlated) with BakeryToken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BakeryToken has no effect on the direction of Alpaca Finance i.e., Alpaca Finance and BakeryToken go up and down completely randomly.

Pair Corralation between Alpaca Finance and BakeryToken

Assuming the 90 days trading horizon Alpaca Finance is expected to generate 0.69 times more return on investment than BakeryToken. However, Alpaca Finance is 1.45 times less risky than BakeryToken. It trades about -0.07 of its potential returns per unit of risk. BakeryToken is currently generating about -0.06 per unit of risk. If you would invest  92.00  in Alpaca Finance on April 8, 2022 and sell it today you would lose (69.00)  from holding Alpaca Finance or give up 75.0% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Alpaca Finance  vs.  BakeryToken

 Performance (%) 
      Timeline 
Alpaca Finance 
Alpaca Performance
0 of 100
Over the last 90 days Alpaca Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for Alpaca Finance investors.

Alpaca Price Channel

BakeryToken 
BakeryToken Performance
0 of 100
Over the last 90 days BakeryToken has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's forward-looking signals remain somewhat strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for BakeryToken investors.

BakeryToken Price Channel

Alpaca Finance and BakeryToken Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alpaca Finance and BakeryToken

The main advantage of trading using opposite Alpaca Finance and BakeryToken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpaca Finance position performs unexpectedly, BakeryToken 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 BakeryToken will offset losses from the drop in BakeryToken's long position.
The idea behind Alpaca Finance and BakeryToken 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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