Correlation Between FTX Token and AllianceBlock

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

Diversification Opportunities for FTX Token and AllianceBlock

0.37
  Correlation Coefficient

Weak diversification

The 3 months correlation between FTX Token and AllianceBlock is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and AllianceBlock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBlock and FTX Token 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 FTX Token are associated (or correlated) with AllianceBlock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianceBlock has no effect on the direction of FTX Token i.e., FTX Token and AllianceBlock go up and down completely randomly.

Pair Corralation between FTX Token and AllianceBlock

Assuming the 90 days trading horizon FTX Token is expected to generate 1.11 times less return on investment than AllianceBlock. But when comparing it to its historical volatility, FTX Token is 2.13 times less risky than AllianceBlock. It trades about 0.23 of its potential returns per unit of risk. AllianceBlock is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5.17  in AllianceBlock on May 14, 2022 and sell it today you would earn a total of  0.74  from holding AllianceBlock or generate 14.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

FTX Token  vs.  AllianceBlock

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

FTX Token Price Channel

AllianceBlock 
AllianceBlock Performance
0 of 100
Over the last 90 days AllianceBlock 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 fundamental drivers remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for AllianceBlock investors.

AllianceBlock Price Channel

FTX Token and AllianceBlock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FTX Token and AllianceBlock

The main advantage of trading using opposite FTX Token and AllianceBlock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTX Token position performs unexpectedly, AllianceBlock 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 AllianceBlock will offset losses from the drop in AllianceBlock's long position.
The idea behind FTX Token and AllianceBlock 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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