Correlation Between Tether and Waves
Can any of the company-specific risk be diversified away by investing in both Tether and Waves 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 Tether and Waves into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tether and Waves, you can compare the effects of market volatilities on Tether and Waves 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 Tether with a short position of Waves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tether and Waves.
Diversification Opportunities for Tether and Waves
Pay attention - limited upside
The 3 months correlation between Tether and Waves is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tether and Waves in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waves and Tether 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 Tether are associated (or correlated) with Waves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waves has no effect on the direction of Tether i.e., Tether and Waves go up and down completely randomly.
Pair Corralation between Tether and Waves
Assuming the 90 days trading horizon Tether is not expected to generate positive returns. However, Tether is 92.17 times less risky than Waves. It waists most of its returns potential to compensate for thr risk taken. Waves is generating about -0.01 per unit of risk. If you would invest 100.00 in Tether on January 26, 2024 and sell it today you would earn a total of 0.00 from holding Tether or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tether vs. Waves
Performance |
| Timeline |
| Tether |
| Waves |
Tether and Waves Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tether and Waves
The main advantage of trading using opposite Tether and Waves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tether position performs unexpectedly, Waves 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 Waves will offset losses from the drop in Waves' long position.The idea behind Tether and Waves 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 the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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