Correlation Between Near and Cardano

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

Diversification Opportunities for Near and Cardano

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Near and Cardano is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Near and Cardano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardano and Near 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 Near are associated (or correlated) with Cardano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardano has no effect on the direction of Near i.e., Near and Cardano go up and down completely randomly.

Pair Corralation between Near and Cardano

Assuming the 90 days trading horizon Near is expected to generate 1.6 times more return on investment than Cardano. However, Near is 1.6 times more volatile than Cardano. It trades about 0.1 of its potential returns per unit of risk. Cardano is currently generating about 0.0 per unit of risk. If you would invest  409.00  in Near on May 11, 2022 and sell it today you would earn a total of  87.00  from holding Near or generate 21.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Near  vs.  Cardano

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

Near Price Channel

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

Cardano Price Channel

Near and Cardano Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Near and Cardano

The main advantage of trading using opposite Near and Cardano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Near position performs unexpectedly, Cardano 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 Cardano will offset losses from the drop in Cardano's long position.
The idea behind Near and Cardano 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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