Correlation Between Image Protect and Coinbase Global

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

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

Diversification Opportunities for Image Protect and Coinbase Global

0.33

Correlation Coefficient

Image Protect  Coinbase Global

Weak diversification

The 3 months correlation between Image and Coinbase is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Image Protect and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global and Image Protect 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 Image Protect are associated (or correlated) with Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of Image Protect i.e., Image Protect and Coinbase Global go up and down completely randomly.

Pair Corralation between Image Protect and Coinbase Global

Given the investment horizon of 90 days Image Protect is expected to generate 4.77 times more return on investment than Coinbase Global. However, Image Protect is 4.77 times more volatile than Coinbase Global. It trades about 0.22 of its potential returns per unit of risk. Coinbase Global is currently generating about -0.16 per unit of risk. If you would invest  0.01  in Image Protect on January 26, 2024 and sell it today you would earn a total of  0.01  from holding Image Protect or generate 100.0% return on investment over 90 days.

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

Image Protect  vs.  Coinbase Global

Image Protect

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Image Protect are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Image Protect disclosed solid returns over the last few months and may actually be approaching a breakup point.

Coinbase Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Coinbase Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Image Protect and Coinbase Global

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

The idea behind Image Protect and Coinbase Global 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.