Correlation Between FTX Token and Compound Governance

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

Diversification Opportunities for FTX Token and Compound Governance

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between FTX Token and Compound is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and Compound Governance Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compound Governance Token and FTX Token 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 FTX Token are associated (or correlated) with Compound Governance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compound Governance Token has no effect on the direction of FTX Token i.e., FTX Token and Compound Governance go up and down completely randomly.

Pair Corralation between FTX Token and Compound Governance

Assuming the 90 days trading horizon FTX Token is expected to generate 0.64 times more return on investment than Compound Governance. However, FTX Token is 1.57 times less risky than Compound Governance. It trades about -0.05 of its potential returns per unit of risk. Compound Governance Token is currently generating about -0.07 per unit of risk. If you would invest  6,156  in FTX Token on May 20, 2022 and sell it today you would lose (3,135)  from holding FTX Token or give up 50.93% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

FTX Token  vs.  Compound Governance Token

 Performance (%) 
       Timeline  
FTX Token 
FTX Token Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in FTX Token are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FTX Token may actually be approaching a critical reversion point that can send shares even higher in September 2022.

FTX Token Price Channel

Compound Governance Token 
Compound Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Compound Governance Token are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Compound Governance may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Compound Price Channel

FTX Token and Compound Governance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FTX Token and Compound Governance

The main advantage of trading using opposite FTX Token and Compound Governance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTX Token position performs unexpectedly, Compound Governance 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 Compound Governance will offset losses from the drop in Compound Governance's long position.
The idea behind FTX Token and Compound Governance 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.
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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