Correlation Between Curve DAO and Automata

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

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

Diversification Opportunities for Curve DAO and Automata

0.63

Correlation Coefficient

Curve DAO  Automata

Poor diversification

The 3 months correlation between Curve and Automata is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Curve DAO Token and Automata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automata and Curve DAO 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 Curve DAO Token are associated (or correlated) with Automata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automata has no effect on the direction of Curve DAO i.e., Curve DAO and Automata go up and down completely randomly.

Pair Corralation between Curve DAO and Automata

Assuming the 90 days trading horizon Curve DAO Token is expected to under-perform the Automata. But the crypto coin apears to be less risky and, when comparing its historical volatility, Curve DAO Token is 2.46 times less risky than Automata. The crypto coin trades about -0.3 of its potential returns per unit of risk. The Automata is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Automata on January 19, 2024 and sell it today you would lose (4.00) from holding Automata or give up 23.53% of portfolio value over 90 days.

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

Curve DAO Token  vs.  Automata

Curve DAO Token

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Curve DAO Token has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Curve DAO Token shareholders.

Automata

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Automata are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Automata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Curve DAO and Automata

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

The idea behind Curve DAO Token and Automata 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.