Correlation Between Dai and Optimism

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

Diversification Opportunities for Dai and Optimism

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dai and Optimism is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dai and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism and Dai 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 Dai are associated (or correlated) with Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of Dai i.e., Dai and Optimism go up and down completely randomly.

Pair Corralation between Dai and Optimism

Assuming the 90 days trading horizon Dai is not expected to generate positive returns. However, Dai is 635.57 times less risky than Optimism. It waists most of its returns potential to compensate for thr risk taken. Optimism is generating about 0.06 per unit of risk. If you would invest  0.00  in Optimism on July 2, 2022 and sell it today you would earn a total of  90.00  from holding Optimism or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy81.33%
ValuesDaily Returns

Dai  vs.  Optimism

 Performance (%) 
       Timeline  
Dai 
Dai Performance
0 of 100
Over the last 90 days Dai has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Dai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dai Price Channel

Optimism 
Optimism Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Optimism are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Optimism sustained solid returns over the last few months and may actually be approaching a breakup point.

Optimism Price Channel

Dai and Optimism Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dai and Optimism

The main advantage of trading using opposite Dai and Optimism positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dai position performs unexpectedly, Optimism 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 Optimism will offset losses from the drop in Optimism's long position.
Dai vs. XRP
Dai vs. Solana
Dai vs. Polkadot
Dai vs. Chainlink
The idea behind Dai and Optimism 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.
Optimism vs. XRP
Optimism vs. Solana
Optimism vs. Polkadot
Optimism vs. Chainlink
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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