Correlation Between Cardano and Balancer

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

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

Diversification Opportunities for Cardano and Balancer

0.93

Correlation Coefficient

Cardano  Balancer

Almost no diversification

The 3 months correlation between Cardano and Balancer is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Balancer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balancer and Cardano 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 Cardano are associated (or correlated) with Balancer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balancer has no effect on the direction of Cardano i.e., Cardano and Balancer go up and down completely randomly.

Pair Corralation between Cardano and Balancer

Assuming the 90 days trading horizon Cardano is expected to under-perform the Balancer. But the crypto coin apears to be less risky and, when comparing its historical volatility, Cardano is 1.05 times less risky than Balancer. The crypto coin trades about -0.19 of its potential returns per unit of risk. The Balancer is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  448.00  in Balancer on January 17, 2024 and sell it today you would lose (62.00) from holding Balancer or give up 13.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Cardano  vs.  Balancer

Cardano

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cardano is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Balancer

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Balancer are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Balancer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cardano and Balancer

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

The idea behind Cardano and Balancer 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.