Correlation Between Curve DAO and NXT
Can any of the company-specific risk be diversified away by investing in both Curve DAO and NXT 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 Curve DAO and NXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Curve DAO Token and NXT, you can compare the effects of market volatilities on Curve DAO and NXT 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 Curve DAO with a short position of NXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curve DAO and NXT.
Diversification Opportunities for Curve DAO and NXT
Poor diversification
The 3 months correlation between Curve and NXT is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Curve DAO Token and NXT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXT and Curve DAO 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 Curve DAO Token are associated (or correlated) with NXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXT has no effect on the direction of Curve DAO i.e., Curve DAO and NXT go up and down completely randomly.
Pair Corralation between Curve DAO and NXT
Assuming the 90 days trading horizon Curve DAO Token is expected to generate 2.11 times more return on investment than NXT. However, Curve DAO is 2.11 times more volatile than NXT. It trades about 0.62 of its potential returns per unit of risk. NXT is currently generating about 0.33 per unit of risk. If you would invest 24.00 in Curve DAO Token on September 4, 2024 and sell it today you would earn a total of 50.00 from holding Curve DAO Token or generate 208.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Curve DAO Token vs. NXT
Performance |
| Timeline |
| Curve DAO Token |
| NXT |
Curve DAO and NXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Curve DAO and NXT
The main advantage of trading using opposite Curve DAO and NXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curve DAO position performs unexpectedly, NXT 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 NXT will offset losses from the drop in NXT's long position.The idea behind Curve DAO Token and NXT 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |