Correlation Between LEO Token and Stellar

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

Diversification Opportunities for LEO Token and Stellar

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between LEO Token and Stellar is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding LEO Token and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar and LEO 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 LEO Token are associated (or correlated) with Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of LEO Token i.e., LEO Token and Stellar go up and down completely randomly.

Pair Corralation between LEO Token and Stellar

Assuming the 90 days trading horizon LEO Token is expected to under-perform the Stellar. But the crypto coin apears to be less risky and, when comparing its historical volatility, LEO Token is 2.12 times less risky than Stellar. The crypto coin trades about -0.04 of its potential returns per unit of risk. The Stellar is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Stellar on May 21, 2022 and sell it today you would earn a total of  1.00  from holding Stellar or generate 9.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LEO Token  vs.  Stellar

 Performance (%) 
       Timeline  
LEO Token 
LEO Token Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in LEO Token are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, LEO Token may actually be approaching a critical reversion point that can send shares even higher in September 2022.

LEO Token Price Channel

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

Stellar Price Channel

LEO Token and Stellar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LEO Token and Stellar

The main advantage of trading using opposite LEO Token and Stellar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEO Token position performs unexpectedly, Stellar 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 Stellar will offset losses from the drop in Stellar's long position.
The idea behind LEO Token and Stellar 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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