Correlation Between Uniswap Protocol and LAMB

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

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

Diversification Opportunities for Uniswap Protocol and LAMB

0.76

Correlation Coefficient

Uniswap Protocol  LAMB

Poor diversification

The 3 months correlation between Uniswap and LAMB is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and LAMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAMB and Uniswap Protocol 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 Uniswap Protocol Token are associated (or correlated) with LAMB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAMB has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and LAMB go up and down completely randomly.

Pair Corralation between Uniswap Protocol and LAMB

Assuming the 90 days trading horizon Uniswap Protocol Token is expected to under-perform the LAMB. But the crypto coin apears to be less risky and, when comparing its historical volatility, Uniswap Protocol Token is 1.48 times less risky than LAMB. The crypto coin trades about -0.33 of its potential returns per unit of risk. The LAMB is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  1.09  in LAMB on January 25, 2024 and sell it today you would lose (0.38) from holding LAMB or give up 34.87% of portfolio value over 90 days.

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

Uniswap Protocol Token  vs.  LAMB

Uniswap Protocol Token

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Uniswap Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

LAMB

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LAMB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, LAMB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uniswap Protocol and LAMB

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

The idea behind Uniswap Protocol Token and LAMB 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.