Correlation Between ULT and Basic Attention
Can any of the company-specific risk be diversified away by investing in both ULT and Basic Attention 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 ULT and Basic Attention into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ULT and Basic Attention Token, you can compare the effects of market volatilities on ULT and Basic Attention 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 ULT with a short position of Basic Attention. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULT and Basic Attention.
Diversification Opportunities for ULT and Basic Attention
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ULT and Basic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ULT and Basic Attention Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Attention Token and ULT 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 ULT are associated (or correlated) with Basic Attention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Attention Token has no effect on the direction of ULT i.e., ULT and Basic Attention go up and down completely randomly.
Pair Corralation between ULT and Basic Attention
Assuming the 90 days trading horizon ULT is expected to under-perform the Basic Attention. But the crypto coin apears to be less risky and, when comparing its historical volatility, ULT is 1.46 times less risky than Basic Attention. The crypto coin trades about -0.01 of its potential returns per unit of risk. The Basic Attention Token is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Basic Attention Token on January 25, 2024 and sell it today you would lose (31.00) from holding Basic Attention Token or give up 53.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 70.96% |
| Values | Daily Returns |
ULT vs. Basic Attention Token
Performance |
| Timeline |
| ULT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Basic Attention Token |
ULT and Basic Attention Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ULT and Basic Attention
The main advantage of trading using opposite ULT and Basic Attention positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULT position performs unexpectedly, Basic Attention 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 Basic Attention will offset losses from the drop in Basic Attention's long position.The idea behind ULT and Basic Attention Token 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.| Basic Attention vs. Solana | Basic Attention vs. XRP | Basic Attention vs. The Open Network | Basic Attention vs. Staked Ether |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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