Correlation Between DATA and Curve DAO

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

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

Diversification Opportunities for DATA and Curve DAO

0.86

Correlation Coefficient

DATA  Curve DAO

Very poor diversification

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

Pair Corralation between DATA and Curve DAO

Assuming the 90 days trading horizon DATA is expected to generate 1.29 times more return on investment than Curve DAO. However, DATA is 1.29 times more volatile than Curve DAO Token. It trades about -0.06 of its potential returns per unit of risk. Curve DAO Token is currently generating about -0.32 per unit of risk. If you would invest  7.59  in DATA on January 26, 2024 and sell it today you would lose (1.14) from holding DATA or give up 15.02% of portfolio value over 90 days.

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

DATA  vs.  Curve DAO Token

DATA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DATA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DATA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Curve DAO Token

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with DATA and Curve DAO

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

The idea behind DATA and Curve DAO 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.

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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.