Correlation Between Arbitrum and Starknet
Can any of the company-specific risk be diversified away by investing in both Arbitrum and Starknet 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 Starknet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbitrum and Starknet, you can compare the effects of market volatilities on Arbitrum and Starknet 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 Starknet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbitrum and Starknet.
Diversification Opportunities for Arbitrum and Starknet
Almost no diversification
The 3 months correlation between Arbitrum and Starknet is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Arbitrum and Starknet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starknet 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 Starknet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starknet has no effect on the direction of Arbitrum i.e., Arbitrum and Starknet go up and down completely randomly.
Pair Corralation between Arbitrum and Starknet
Assuming the 90 days trading horizon Arbitrum is expected to generate 0.89 times more return on investment than Starknet. However, Arbitrum is 1.12 times less risky than Starknet. It trades about -0.02 of its potential returns per unit of risk. Starknet is currently generating about -0.07 per unit of risk. If you would invest 119.00 in Arbitrum on August 26, 2024 and sell it today you would lose (33.00) from holding Arbitrum or give up 27.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbitrum vs. Starknet
Performance |
| Timeline |
| Arbitrum |
| Starknet |
Arbitrum and Starknet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbitrum and Starknet
The main advantage of trading using opposite Arbitrum and Starknet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbitrum position performs unexpectedly, Starknet 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 Starknet will offset losses from the drop in Starknet's long position.The idea behind Arbitrum and Starknet 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |