Correlation Between Optimism and 1inch

Can any of the company-specific risk be diversified away by investing in both Optimism and 1inch 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 Optimism and 1inch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Optimism and 1inch, you can compare the effects of market volatilities on Optimism and 1inch 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 Optimism with a short position of 1inch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimism and 1inch.

Diversification Opportunities for Optimism and 1inch

0.65

Correlation Coefficient

Optimism  1inch

Poor diversification

The 3 months correlation between Optimism and 1inch is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and 1inch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1inch and Optimism 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 Optimism are associated (or correlated) with 1inch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1inch has no effect on the direction of Optimism i.e., Optimism and 1inch go up and down completely randomly.

Pair Corralation between Optimism and 1inch

Assuming the 90 days horizon Optimism is expected to under-perform the 1inch. In addition to that, Optimism is 1.08 times more volatile than 1inch. It trades about -0.23 of its total potential returns per unit of risk. 1inch is currently generating about -0.17 per unit of volatility. If you would invest  58.00  in 1inch on January 26, 2024 and sell it today you would lose (14.00) from holding 1inch or give up 24.14% of portfolio value over 90 days.

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

Optimism  vs.  1inch

Optimism

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optimism has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Optimism shareholders.

1inch

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 1inch are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, 1inch exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optimism and 1inch

The main advantage of trading using opposite Optimism and 1inch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism position performs unexpectedly, 1inch 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 1inch will offset losses from the drop in 1inch's long position.

The idea behind Optimism and 1inch 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.