Correlation Between FTX Token and STEPN

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

Diversification Opportunities for FTX Token and STEPN

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between FTX Token and STEPN is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and STEPN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEPN 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 STEPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEPN has no effect on the direction of FTX Token i.e., FTX Token and STEPN go up and down completely randomly.

Pair Corralation between FTX Token and STEPN

Assuming the 90 days trading horizon FTX Token is expected to generate 0.73 times more return on investment than STEPN. However, FTX Token is 1.37 times less risky than STEPN. It trades about 0.34 of its potential returns per unit of risk. STEPN is currently generating about 0.11 per unit of risk. If you would invest  2,385  in FTX Token on May 10, 2022 and sell it today you would earn a total of  655.00  from holding FTX Token or generate 27.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

FTX Token  vs.  STEPN

 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

STEPN 
STEPN Performance
0 of 100
Over the last 90 days STEPN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, STEPN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

STEPN Price Channel

FTX Token and STEPN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FTX Token and STEPN

The main advantage of trading using opposite FTX Token and STEPN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTX Token position performs unexpectedly, STEPN 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 STEPN will offset losses from the drop in STEPN's long position.
The idea behind FTX Token and STEPN 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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