Correlation Between Curve DAO and DOCK

Can any of the company-specific risk be diversified away by investing in both Curve DAO and DOCK 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 DOCK 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 DOCK, you can compare the effects of market volatilities on Curve DAO and DOCK 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 DOCK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curve DAO and DOCK.

Diversification Opportunities for Curve DAO and DOCK

0.86

Correlation Coefficient

Curve DAO  DOCK

Very poor diversification

The 3 months correlation between Curve and DOCK is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Curve DAO Token and DOCK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCK 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 DOCK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCK has no effect on the direction of Curve DAO i.e., Curve DAO and DOCK go up and down completely randomly.

Pair Corralation between Curve DAO and DOCK

Assuming the 90 days trading horizon Curve DAO Token is expected to under-perform the DOCK. But the crypto coin apears to be less risky and, when comparing its historical volatility, Curve DAO Token is 1.05 times less risky than DOCK. The crypto coin trades about -0.3 of its potential returns per unit of risk. The DOCK is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  3.96  in DOCK on January 20, 2024 and sell it today you would lose (1.06) from holding DOCK or give up 26.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Curve DAO Token  vs.  DOCK

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 rather sound basic indicators, Curve DAO is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

DOCK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DOCK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DOCK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Curve DAO and DOCK

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

The idea behind Curve DAO Token and DOCK 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.