Correlation Between Badger DAO and Alchemix

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

Diversification Opportunities for Badger DAO and Alchemix

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Badger and Alchemix is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Badger DAO and Alchemix in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Alchemix and Badger DAO 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 Badger DAO are associated (or correlated) with Alchemix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchemix has no effect on the direction of Badger DAO i.e., Badger DAO and Alchemix go up and down completely randomly.

Pair Corralation between Badger DAO and Alchemix

Assuming the 90 days trading horizon Badger DAO is expected to generate 1.01 times more return on investment than Alchemix. However, Badger DAO is 1.01 times more volatile than Alchemix. It trades about -0.25 of its potential returns per unit of risk. Alchemix is currently generating about -0.45 per unit of risk. If you would invest  926.00  in Badger DAO on February 17, 2022 and sell it today you would lose (387.00)  from holding Badger DAO or give up 41.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Badger DAO  vs.  Alchemix

 Performance (%) 
      Timeline 
Badger DAO 
Badger Performance
0 of 100
Over the last 90 days Badger DAO 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 technical and fundamental indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Badger DAO investors.

Badger Price Channel

Alchemix 
Alchemix Performance
0 of 100
Over the last 90 days Alchemix 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 fundamental indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Alchemix investors.

Alchemix Price Channel

Badger DAO and Alchemix Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Badger DAO and Alchemix

The main advantage of trading using opposite Badger DAO and Alchemix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Badger DAO position performs unexpectedly, Alchemix 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 Alchemix will offset losses from the drop in Alchemix's long position.
The idea behind Badger DAO and Alchemix 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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