Correlation Between Polkadot and Polygon

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Polkadot and Polygon 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 Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polkadot and Polygon, you can compare the effects of market volatilities on Polkadot and Polygon 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 Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polkadot and Polygon.

Diversification Opportunities for Polkadot and Polygon

0.43
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Polkadot and Polygon is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Polkadot and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon 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 Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of Polkadot i.e., Polkadot and Polygon go up and down completely randomly.

Pair Corralation between Polkadot and Polygon

Assuming the 90 days trading horizon Polkadot is expected to under-perform the Polygon. But the crypto coin apears to be less risky and, when comparing its historical volatility, Polkadot is 1.08 times less risky than Polygon. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Polygon is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Polygon on July 5, 2022 and sell it today you would lose (5.00)  from holding Polygon or give up 6.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Polkadot  vs.  Polygon

 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 weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for Polkadot investors.

Polkadot Price Channel

Polygon 
Polygon Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Polygon sustained solid returns over the last few months and may actually be approaching a breakup point.

Polygon Price Channel

Polkadot and Polygon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polkadot and Polygon

The main advantage of trading using opposite Polkadot and Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polkadot position performs unexpectedly, Polygon 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 Polygon will offset losses from the drop in Polygon's long position.
Polkadot vs. XRP
Polkadot vs. Solana
Polkadot vs. Chainlink
Polkadot vs. Polygon
The idea behind Polkadot and Polygon 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.
Polygon vs. XRP
Polygon vs. Solana
Polygon vs. Polkadot
Polygon 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Other Complementary Tools

Money Managers
Screen money managers from public funds and ETFs managed around the world
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go