Correlation Between Arweave and NMC
Can any of the company-specific risk be diversified away by investing in both Arweave and NMC 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 Arweave and NMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arweave and NMC, you can compare the effects of market volatilities on Arweave and NMC 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 Arweave with a short position of NMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arweave and NMC.
Diversification Opportunities for Arweave and NMC
Very good diversification
The 3 months correlation between Arweave and NMC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Arweave and NMC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMC and Arweave 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 Arweave are associated (or correlated) with NMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMC has no effect on the direction of Arweave i.e., Arweave and NMC go up and down completely randomly.
Pair Corralation between Arweave and NMC
Assuming the 90 days horizon Arweave is expected to generate 4.39 times more return on investment than NMC. However, Arweave is 4.39 times more volatile than NMC. It trades about 0.05 of its potential returns per unit of risk. NMC is currently generating about 0.01 per unit of risk. If you would invest 896.00 in Arweave on August 27, 2024 and sell it today you would earn a total of 1,278 from holding Arweave or generate 142.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arweave vs. NMC
Performance |
| Timeline |
| Arweave |
| NMC |
Arweave and NMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arweave and NMC
The main advantage of trading using opposite Arweave and NMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arweave position performs unexpectedly, NMC 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 NMC will offset losses from the drop in NMC's long position.The idea behind Arweave and NMC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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