Correlation Between Optimism and Polygon

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Optimism and Polygon 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 Optimism and Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimism and Polygon, you can compare the effects of market volatilities on Optimism and Polygon 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 Optimism with a short position of Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimism and Polygon.

Diversification Opportunities for Optimism and Polygon

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Optimism and Polygon is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon and Optimism 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 Optimism are associated (or correlated) with Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of Optimism i.e., Optimism and Polygon go up and down completely randomly.

Pair Corralation between Optimism and Polygon

Assuming the 90 days horizon Optimism is expected to under-perform the Polygon. In addition to that, Optimism is 1.71 times more volatile than Polygon. It trades about -0.09 of its total potential returns per unit of risk. Polygon is currently generating about -0.05 per unit of volatility. If you would invest  82.00  in Polygon on July 6, 2022 and sell it today you would lose (5.00)  from holding Polygon or give up 6.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Optimism  vs.  Polygon

 Performance (%) 
       Timeline  
Optimism 
Optimism Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Optimism are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Optimism sustained solid returns over the last few months and may actually be approaching a breakup point.

Optimism Price Channel

Polygon 
Polygon Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Polygon sustained solid returns over the last few months and may actually be approaching a breakup point.

Polygon Price Channel

Optimism and Polygon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Optimism and Polygon

The main advantage of trading using opposite Optimism and Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism position performs unexpectedly, Polygon 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 Polygon will offset losses from the drop in Polygon's long position.
Optimism vs. XRP
Optimism vs. Solana
Optimism vs. Polkadot
Optimism vs. Chainlink
The idea behind Optimism and Polygon 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.
Polygon vs. XRP
Polygon vs. Solana
Polygon vs. Polkadot
Polygon vs. Chainlink
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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Other Complementary Tools

Equity Valuation
Check real value of public entities based on technical and fundamental data
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go