Correlation Between Dai and FTX Token

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Can any of the company-specific risk be diversified away by investing in both Dai and FTX Token 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 Dai and FTX Token into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dai and FTX Token, you can compare the effects of market volatilities on Dai and FTX Token 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 Dai with a short position of FTX Token. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dai and FTX Token.

Diversification Opportunities for Dai and FTX Token

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Dai and FTX is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dai and FTX Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTX Token and Dai 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 Dai are associated (or correlated) with FTX Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTX Token has no effect on the direction of Dai i.e., Dai and FTX Token go up and down completely randomly.

Pair Corralation between Dai and FTX Token

Assuming the 90 days trading horizon Dai is not expected to generate positive returns. However, Dai is 128.74 times less risky than FTX Token. It waists most of its returns potential to compensate for thr risk taken. FTX Token is generating about 0.06 per unit of risk. If you would invest  129.00  in FTX Token on December 29, 2023 and sell it today you would earn a total of  79.00  from holding FTX Token or generate 61.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dai  vs.  FTX Token

 Performance 
       Timeline  
Dai 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days FTX Token has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for FTX Token shareholders.

Dai and FTX Token Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dai and FTX Token

The main advantage of trading using opposite Dai and FTX Token positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dai position performs unexpectedly, FTX Token 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 FTX Token will offset losses from the drop in FTX Token's long position.
The idea behind Dai and FTX Token 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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