Correlation Between Dai and Polkadot

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

Diversification Opportunities for Dai and Polkadot

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dai and Polkadot is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dai and Polkadot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polkadot and Dai 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 Dai 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 Dai i.e., Dai and Polkadot go up and down completely randomly.

Pair Corralation between Dai and Polkadot

Assuming the 90 days trading horizon Dai is not expected to generate positive returns. However, Dai is 61.29 times less risky than Polkadot. It waists most of its returns potential to compensate for thr risk taken. Polkadot is generating about -0.09 per unit of risk. If you would invest  100.00  in Dai on May 9, 2022 and sell it today you would earn a total of  0.00  from holding Dai or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy98.09%
ValuesDaily Returns

Dai  vs.  Polkadot

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

Dai Price Channel

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 latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Polkadot investors.

Polkadot Price Channel

Dai and Polkadot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dai and Polkadot

The main advantage of trading using opposite Dai and Polkadot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dai 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 Dai 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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