Correlation Between FTX Token and Optimism

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

Diversification Opportunities for FTX Token and Optimism

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between FTX Token and Optimism is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism 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 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 FTX Token i.e., FTX Token and Optimism go up and down completely randomly.

Pair Corralation between FTX Token and Optimism

Assuming the 90 days trading horizon FTX Token is expected to under-perform the Optimism. But the crypto coin apears to be less risky and, when comparing its historical volatility, FTX Token is 9.62 times less risky than Optimism. The crypto coin trades about -0.06 of its potential returns per unit of risk. The Optimism is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Optimism on July 2, 2022 and sell it today you would earn a total of  91.00  from holding Optimism or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy48.15%
ValuesDaily Returns

FTX Token  vs.  Optimism

 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

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

FTX Token and Optimism Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FTX Token and Optimism

The main advantage of trading using opposite FTX Token and Optimism positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTX Token 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.
FTX Token vs. XRP
FTX Token vs. Solana
FTX Token vs. Polkadot
FTX Token vs. Chainlink
The idea behind FTX Token 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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