Correlation Between FTX Token and Polkadot

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

Diversification Opportunities for FTX Token and Polkadot

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between FTX Token and Polkadot is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and Polkadot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polkadot 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 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 FTX Token i.e., FTX Token and Polkadot go up and down completely randomly.

Pair Corralation between FTX Token and Polkadot

Assuming the 90 days trading horizon FTX Token is expected to generate 1.9 times less return on investment than Polkadot. But when comparing it to its historical volatility, FTX Token is 1.39 times less risky than Polkadot. It trades about 0.23 of its potential returns per unit of risk. Polkadot is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  672.00  in Polkadot on May 14, 2022 and sell it today you would earn a total of  251.00  from holding Polkadot or generate 37.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

FTX Token  vs.  Polkadot

 Performance (%) 
       Timeline  
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

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 somewhat strong basic indicators, Polkadot is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Polkadot Price Channel

FTX Token and Polkadot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FTX Token and Polkadot

The main advantage of trading using opposite FTX Token and Polkadot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTX Token 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 FTX Token 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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