Correlation Between Power Ledger and Numeraire
Can any of the company-specific risk be diversified away by investing in both Power Ledger and Numeraire 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 Power Ledger and Numeraire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Ledger and Numeraire, you can compare the effects of market volatilities on Power Ledger and Numeraire 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 Power Ledger with a short position of Numeraire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Ledger and Numeraire.
Diversification Opportunities for Power Ledger and Numeraire
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Power and Numeraire is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Power Ledger and Numeraire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Numeraire and Power Ledger 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 Power Ledger are associated (or correlated) with Numeraire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Numeraire has no effect on the direction of Power Ledger i.e., Power Ledger and Numeraire go up and down completely randomly.
Pair Corralation between Power Ledger and Numeraire
Assuming the 90 days trading horizon Power Ledger is expected to generate 1.0 times more return on investment than Numeraire. However, Power Ledger is 1.0 times less risky than Numeraire. It trades about -0.15 of its potential returns per unit of risk. Numeraire is currently generating about -0.18 per unit of risk. If you would invest 39.00 in Power Ledger on January 20, 2024 and sell it today you would lose (10.00) from holding Power Ledger or give up 25.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Ledger vs. Numeraire
Performance |
| Timeline |
| Power Ledger |
| Numeraire |
Power Ledger and Numeraire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Ledger and Numeraire
The main advantage of trading using opposite Power Ledger and Numeraire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Ledger position performs unexpectedly, Numeraire 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 Numeraire will offset losses from the drop in Numeraire's long position.| Power Ledger vs. Staked Ether | Power Ledger vs. XCAD Network | Power Ledger vs. Phala Network | Power Ledger vs. EOSDAC |
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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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