Correlation Between Optimism and FTX Token

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

Diversification Opportunities for Optimism and FTX Token

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Optimism and FTX Token is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and FTX Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTX Token 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 FTX Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTX Token has no effect on the direction of Optimism i.e., Optimism and FTX Token go up and down completely randomly.

Pair Corralation between Optimism and FTX Token

Assuming the 90 days horizon Optimism is expected to under-perform the FTX Token. In addition to that, Optimism is 2.65 times more volatile than FTX Token. It trades about -0.13 of its total potential returns per unit of risk. FTX Token is currently generating about -0.15 per unit of volatility. If you would invest  2,690  in FTX Token on July 2, 2022 and sell it today you would lose (270.00)  from holding FTX Token or give up 10.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Optimism  vs.  FTX Token

 Performance (%) 
       Timeline  
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 
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 and FTX Token Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Optimism and FTX Token

The main advantage of trading using opposite Optimism and FTX Token positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism position performs unexpectedly, FTX Token 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 FTX Token will offset losses from the drop in FTX Token's long position.
Optimism vs. XRP
Optimism vs. Solana
Optimism vs. Polkadot
Optimism vs. Chainlink
The idea behind Optimism and FTX Token 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.
FTX Token vs. XRP
FTX Token vs. Solana
FTX Token vs. Polkadot
FTX Token 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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