Correlation Between Shrapnel and Maverick Protocol

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

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

Diversification Opportunities for Shrapnel and Maverick Protocol

-0.41

Correlation Coefficient

Shrapnel  Maverick Protocol

Very good diversification

The 3 months correlation between Shrapnel and Maverick is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Shrapnel and Maverick Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maverick Protocol and Shrapnel 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 Shrapnel are associated (or correlated) with Maverick Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maverick Protocol has no effect on the direction of Shrapnel i.e., Shrapnel and Maverick Protocol go up and down completely randomly.

Pair Corralation between Shrapnel and Maverick Protocol

Assuming the 90 days trading horizon Shrapnel is expected to generate 1.52 times more return on investment than Maverick Protocol. However, Shrapnel is 1.52 times more volatile than Maverick Protocol. It trades about -0.1 of its potential returns per unit of risk. Maverick Protocol is currently generating about -0.33 per unit of risk. If you would invest  25.00  in Shrapnel on January 30, 2024 and sell it today you would lose (8.00) from holding Shrapnel or give up 32.0% of portfolio value over 90 days.

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

Shrapnel  vs.  Maverick Protocol

Shrapnel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shrapnel are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Shrapnel exhibited solid returns over the last few months and may actually be approaching a breakup point.

Maverick Protocol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maverick Protocol 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 basic indicators 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 Maverick Protocol shareholders.

Pair Trading with Shrapnel and Maverick Protocol

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

The idea behind Shrapnel and Maverick Protocol 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.