Correlation Between Staked Ether and Polygon

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Can any of the company-specific risk be diversified away by investing in both Staked Ether and Polygon 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 Staked Ether and Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Staked Ether and Polygon, you can compare the effects of market volatilities on Staked Ether and Polygon 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 Staked Ether with a short position of Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Staked Ether and Polygon.

Diversification Opportunities for Staked Ether and Polygon

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Staked and Polygon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon and Staked Ether 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 Staked Ether are associated (or correlated) with Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of Staked Ether i.e., Staked Ether and Polygon go up and down completely randomly.

Pair Corralation between Staked Ether and Polygon

Assuming the 90 days trading horizon Staked Ether is expected to generate 1.15 times less return on investment than Polygon. But when comparing it to its historical volatility, Staked Ether is 1.43 times less risky than Polygon. It trades about 0.06 of its potential returns per unit of risk. Polygon is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Polygon on December 29, 2023 and sell it today you would earn a total of  39.00  from holding Polygon or generate 63.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.79%
ValuesDaily Returns

Staked Ether  vs.  Polygon

 Performance 
       Timeline  
Staked Ether 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Staked Ether exhibited solid returns over the last few months and may actually be approaching a breakup point.
Polygon 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Polygon may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Staked Ether and Polygon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Staked Ether and Polygon

The main advantage of trading using opposite Staked Ether and Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Staked Ether position performs unexpectedly, Polygon 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 Polygon will offset losses from the drop in Polygon's long position.
The idea behind Staked Ether and Polygon 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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