Correlation Between FTX Token and Theta Network

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

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

Diversification Opportunities for FTX Token and Theta Network

0.38

Correlation Coefficient

FTX Token  Theta Network

Weak diversification

The 3 months correlation between FTX and Theta is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and Theta Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Network and FTX Token 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 FTX Token are associated (or correlated) with Theta Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Network has no effect on the direction of FTX Token i.e., FTX Token and Theta Network go up and down completely randomly.

Pair Corralation between FTX Token and Theta Network

Assuming the 90 days trading horizon FTX Token is expected to generate 1.13 times more return on investment than Theta Network. However, FTX Token is 1.13 times more volatile than Theta Network. It trades about -0.05 of its potential returns per unit of risk. Theta Network is currently generating about -0.11 per unit of risk. If you would invest  170.00  in FTX Token on February 2, 2024 and sell it today you would lose (26.00) from holding FTX Token or give up 15.29% of portfolio value over 90 days.

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

FTX Token  vs.  Theta Network

FTX Token

Risk-Adjusted Performance

0 of 100

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

Theta Network

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Theta Network are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Theta Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTX Token and Theta Network

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

The idea behind FTX Token and Theta Network 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.