Correlation Between Optimism and Polkadot

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

Diversification Opportunities for Optimism and Polkadot

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Optimism and Polkadot is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and Polkadot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polkadot and Optimism 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 Optimism are associated (or correlated) with Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polkadot has no effect on the direction of Optimism i.e., Optimism and Polkadot go up and down completely randomly.

Pair Corralation between Optimism and Polkadot

Assuming the 90 days horizon Optimism is expected to generate 11.25 times more return on investment than Polkadot. However, Optimism is 11.25 times more volatile than Polkadot. It trades about 0.05 of its potential returns per unit of risk. Polkadot is currently generating about -0.21 per unit of risk. If you would invest  0.00  in Optimism on June 29, 2022 and sell it today you would earn a total of  113.00  from holding Optimism or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy5.97%
ValuesDaily Returns

Optimism  vs.  Polkadot

 Performance (%) 
       Timeline  
Optimism 
Optimism Performance
0 of 100
Over the last 90 days Optimism has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Optimism sustained solid returns over the last few months and may actually be approaching a breakup point.
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 October 2022. The current disturbance may also be a sign of long term up-swing for Polkadot investors.

Optimism and Polkadot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Optimism and Polkadot

The main advantage of trading using opposite Optimism and Polkadot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism position performs unexpectedly, Polkadot 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 Polkadot will offset losses from the drop in Polkadot's long position.
The idea behind Optimism and Polkadot 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

Other Complementary Tools

Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go