Correlation Between Arbitrum and ANT
Can any of the company-specific risk be diversified away by investing in both Arbitrum and ANT 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 Arbitrum and ANT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbitrum and ANT, you can compare the effects of market volatilities on Arbitrum and ANT 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 Arbitrum with a short position of ANT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbitrum and ANT.
Diversification Opportunities for Arbitrum and ANT
Very good diversification
The 3 months correlation between Arbitrum and ANT is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arbitrum and ANT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANT and Arbitrum 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 Arbitrum are associated (or correlated) with ANT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANT has no effect on the direction of Arbitrum i.e., Arbitrum and ANT go up and down completely randomly.
Pair Corralation between Arbitrum and ANT
Assuming the 90 days trading horizon Arbitrum is expected to generate 57.69 times less return on investment than ANT. But when comparing it to its historical volatility, Arbitrum is 14.28 times less risky than ANT. It trades about 0.03 of its potential returns per unit of risk. ANT is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 833.00 in ANT on October 25, 2024 and sell it today you would lose (686.00) from holding ANT or give up 82.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbitrum vs. ANT
Performance |
| Timeline |
| Arbitrum |
| ANT |
Arbitrum and ANT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbitrum and ANT
The main advantage of trading using opposite Arbitrum and ANT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbitrum position performs unexpectedly, ANT 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 ANT will offset losses from the drop in ANT's long position.The idea behind Arbitrum and ANT 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |