Correlation Between Polygon and TRON

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

Diversification Opportunities for Polygon and TRON

-0.3
  Correlation Coefficient

Very good diversification

The 5 months correlation between Polygon and TRON is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and TRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRON and Polygon 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 Polygon are associated (or correlated) with TRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRON has no effect on the direction of Polygon i.e., Polygon and TRON go up and down completely randomly.

Pair Corralation between Polygon and TRON

Assuming the 90 days trading horizon Polygon is expected to generate 5.31 times more return on investment than TRON. However, Polygon is 5.31 times more volatile than TRON. It trades about 0.31 of its potential returns per unit of risk. TRON is currently generating about 0.21 per unit of risk. If you would invest  54.00  in Polygon on May 10, 2022 and sell it today you would earn a total of  37.00  from holding Polygon or generate 68.52% return on investment over 90 days.
Time Period5 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Polygon  vs.  TRON

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

Polygon Price Channel

TRON 
TRON Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, TRON sustained solid returns over the last few months and may actually be approaching a breakup point.

TRON Price Channel

Polygon and TRON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polygon and TRON

The main advantage of trading using opposite Polygon and TRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon position performs unexpectedly, TRON 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 TRON will offset losses from the drop in TRON's long position.
The idea behind Polygon and TRON 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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