Correlation Between Coinbase Global and Plumb Balanced

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

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

Diversification Opportunities for Coinbase Global and Plumb Balanced

0.93

Correlation Coefficient

Coinbase Global  Plumb Balanced

Almost no diversification

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

Pair Corralation between Coinbase Global and Plumb Balanced

Given the investment horizon of 90 days Coinbase Global is expected to generate 6.5 times more return on investment than Plumb Balanced. However, Coinbase Global is 6.5 times more volatile than Plumb Balanced Fund. It trades about 0.05 of its potential returns per unit of risk. Plumb Balanced Fund is currently generating about 0.05 per unit of risk. If you would invest  11,271  in Coinbase Global on January 19, 2024 and sell it today you would earn a total of  10,107  from holding Coinbase Global or generate 89.67% return on investment over 90 days.

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

Coinbase Global  vs.  Plumb Balanced Fund

Coinbase Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 14 (%) 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.

Plumb Balanced

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plumb Balanced Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Plumb Balanced may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Coinbase Global and Plumb Balanced

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

The idea behind Coinbase Global and Plumb Balanced Fund 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.