Correlation Between Polkadot and Boson Protocol

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

Diversification Opportunities for Polkadot and Boson Protocol

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Polkadot and Boson is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Polkadot and Boson Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boson Protocol 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 Boson Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boson Protocol has no effect on the direction of Polkadot i.e., Polkadot and Boson Protocol go up and down completely randomly.

Pair Corralation between Polkadot and Boson Protocol

Assuming the 90 days trading horizon Polkadot is expected to generate 1.75 times less return on investment than Boson Protocol. But when comparing it to its historical volatility, Polkadot is 1.57 times less risky than Boson Protocol. It trades about 0.33 of its potential returns per unit of risk. Boson Protocol is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Boson Protocol on May 11, 2022 and sell it today you would earn a total of  14.00  from holding Boson Protocol or generate 63.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.24%
ValuesDaily Returns

Polkadot  vs.  Boson Protocol

 Performance (%) 
       Timeline  
Polkadot 
Polkadot Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Polkadot are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Polkadot may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Polkadot Price Channel

Boson Protocol 
Boson Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boson Protocol are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boson Protocol sustained solid returns over the last few months and may actually be approaching a breakup point.

Boson Price Channel

Polkadot and Boson Protocol Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polkadot and Boson Protocol

The main advantage of trading using opposite Polkadot and Boson Protocol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polkadot position performs unexpectedly, Boson Protocol 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 Boson Protocol will offset losses from the drop in Boson Protocol's long position.
The idea behind Polkadot and Boson Protocol 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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