Correlation Between ACV Auctions and Coinbase Global

Can any of the company-specific risk be diversified away by investing in both ACV Auctions and Coinbase Global 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 ACV Auctions and Coinbase Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACV Auctions and Coinbase Global, you can compare the effects of market volatilities on ACV Auctions and Coinbase Global 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 ACV Auctions with a short position of Coinbase Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACV Auctions and Coinbase Global.

Diversification Opportunities for ACV Auctions and Coinbase Global

0.94

Correlation Coefficient

ACV Auctions  Coinbase Global

Almost no diversification

The 3 months correlation between ACV and Coinbase is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ACV Auctions and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global and ACV Auctions 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 ACV Auctions are associated (or correlated) with Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of ACV Auctions i.e., ACV Auctions and Coinbase Global go up and down completely randomly.

Pair Corralation between ACV Auctions and Coinbase Global

Given the investment horizon of 90 days ACV Auctions is expected to generate 0.51 times more return on investment than Coinbase Global. However, ACV Auctions is 1.97 times less risky than Coinbase Global. It trades about -0.06 of its potential returns per unit of risk. Coinbase Global is currently generating about -0.16 per unit of risk. If you would invest  1,855  in ACV Auctions on January 26, 2024 and sell it today you would lose (59.00) from holding ACV Auctions or give up 3.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

ACV Auctions  vs.  Coinbase Global

ACV Auctions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACV Auctions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, ACV Auctions sustained solid returns over the last few months and may actually be approaching a breakup point.

Coinbase Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Coinbase Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACV Auctions and Coinbase Global

The main advantage of trading using opposite ACV Auctions and Coinbase Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACV Auctions position performs unexpectedly, Coinbase Global 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 Coinbase Global will offset losses from the drop in Coinbase Global's long position.

The idea behind ACV Auctions and Coinbase Global 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.