Correlation Between Phala Network and NEXO
Can any of the company-specific risk be diversified away by investing in both Phala Network and NEXO 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 Phala Network and NEXO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phala Network and NEXO, you can compare the effects of market volatilities on Phala Network and NEXO 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 Phala Network with a short position of NEXO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phala Network and NEXO.
Diversification Opportunities for Phala Network and NEXO
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phala and NEXO is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Phala Network and NEXO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXO and Phala Network 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 Phala Network are associated (or correlated) with NEXO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXO has no effect on the direction of Phala Network i.e., Phala Network and NEXO go up and down completely randomly.
Pair Corralation between Phala Network and NEXO
Assuming the 90 days trading horizon Phala Network is expected to under-perform the NEXO. In addition to that, Phala Network is 1.92 times more volatile than NEXO. It trades about -0.2 of its total potential returns per unit of risk. NEXO is currently generating about -0.07 per unit of volatility. If you would invest 132.00 in NEXO on January 26, 2024 and sell it today you would lose (8.00) from holding NEXO or give up 6.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Phala Network vs. NEXO
Performance |
Timeline |
Phala Network |
NEXO |
Phala Network and NEXO Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Phala Network and NEXO
The main advantage of trading using opposite Phala Network and NEXO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phala Network position performs unexpectedly, NEXO 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 NEXO will offset losses from the drop in NEXO's long position.Phala Network vs. Solana | Phala Network vs. XRP | Phala Network vs. Staked Ether | Phala Network vs. The Open Network |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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