Correlation Between IOTA and Dogecoin

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

Diversification Opportunities for IOTA and Dogecoin

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between IOTA and Dogecoin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding IOTA and Dogecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogecoin and IOTA 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 IOTA are associated (or correlated) with Dogecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogecoin has no effect on the direction of IOTA i.e., IOTA and Dogecoin go up and down completely randomly.

Pair Corralation between IOTA and Dogecoin

Assuming the 90 days trading horizon IOTA is expected to under-perform the Dogecoin. But the crypto coin apears to be less risky and, when comparing its historical volatility, IOTA is 1.97 times less risky than Dogecoin. The crypto coin trades about -0.05 of its potential returns per unit of risk. The Dogecoin is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5.89  in Dogecoin on September 3, 2022 and sell it today you would earn a total of  4.11  from holding Dogecoin or generate 69.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

IOTA  vs.  Dogecoin

 Performance (%) 
       Timeline  
IOTA 
IOTA Performance
0 of 100
Over the last 90 days IOTA 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 January 2023. The current disturbance may also be a sign of long term up-swing for IOTA investors.

IOTA Price Channel

Dogecoin 
Dogecoin Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dogecoin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Dogecoin sustained solid returns over the last few months and may actually be approaching a breakup point.

Dogecoin Price Channel

IOTA and Dogecoin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IOTA and Dogecoin

The main advantage of trading using opposite IOTA and Dogecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IOTA position performs unexpectedly, Dogecoin 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 Dogecoin will offset losses from the drop in Dogecoin's long position.
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The idea behind IOTA and Dogecoin 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.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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