Correlation Between Kava and Tellor

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

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

Diversification Opportunities for Kava and Tellor

-0.14

Correlation Coefficient

Kava  Tellor

Good diversification

The 3 months correlation between Kava and Tellor is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kava and Tellor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tellor and Kava 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 Kava are associated (or correlated) with Tellor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tellor has no effect on the direction of Kava i.e., Kava and Tellor go up and down completely randomly.

Pair Corralation between Kava and Tellor

Assuming the 90 days trading horizon Kava is expected to generate 0.81 times more return on investment than Tellor. However, Kava is 1.24 times less risky than Tellor. It trades about 0.01 of its potential returns per unit of risk. Tellor is currently generating about -0.13 per unit of risk. If you would invest  70.00  in Kava on January 20, 2024 and sell it today you would lose (3.00) from holding Kava or give up 4.29% of portfolio value over 90 days.

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

Kava  vs.  Tellor

Kava

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tellor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tellor 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 fundamental drivers remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for Tellor shareholders.

Pair Trading with Kava and Tellor

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

The idea behind Kava and Tellor 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.