Correlation Between Polkadot and Bounce Finance

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

Diversification Opportunities for Polkadot and Bounce Finance

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Polkadot and Bounce is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Polkadot and Bounce Finance Governance Toke in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bounce Finance Gover and Polkadot 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 Polkadot are associated (or correlated) with Bounce Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bounce Finance Gover has no effect on the direction of Polkadot i.e., Polkadot and Bounce Finance go up and down completely randomly.

Pair Corralation between Polkadot and Bounce Finance

Assuming the 90 days trading horizon Polkadot is expected to under-perform the Bounce Finance. But the crypto coin apears to be less risky and, when comparing its historical volatility, Polkadot is 1.49 times less risky than Bounce Finance. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Bounce Finance Governance is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  5,185  in Bounce Finance Governance on May 9, 2022 and sell it today you would lose (4,103)  from holding Bounce Finance Governance or give up 79.13% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Polkadot  vs.  Bounce Finance Governance Toke

 Performance (%) 
       Timeline  
Polkadot 
Polkadot Performance
0 of 100
Over the last 90 days Polkadot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Polkadot investors.

Polkadot Price Channel

Bounce Finance Gover 
Bounce Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bounce Finance Governance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Bounce Finance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bounce Price Channel

Polkadot and Bounce Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polkadot and Bounce Finance

The main advantage of trading using opposite Polkadot and Bounce Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polkadot position performs unexpectedly, Bounce Finance 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 Bounce Finance will offset losses from the drop in Bounce Finance's long position.
The idea behind Polkadot and Bounce Finance Governance 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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