Correlation Between DATA and DUSK
Can any of the company-specific risk be diversified away by investing in both DATA and DUSK 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 DATA and DUSK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATA and DUSK, you can compare the effects of market volatilities on DATA and DUSK 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 DATA with a short position of DUSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATA and DUSK.
Diversification Opportunities for DATA and DUSK
Very poor diversification
The 3 months correlation between DATA and DUSK is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding DATA and DUSK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUSK and DATA 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 DATA are associated (or correlated) with DUSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUSK has no effect on the direction of DATA i.e., DATA and DUSK go up and down completely randomly.
Pair Corralation between DATA and DUSK
Assuming the 90 days trading horizon DATA is expected to generate 1.15 times less return on investment than DUSK. But when comparing it to its historical volatility, DATA is 1.19 times less risky than DUSK. It trades about 0.54 of its potential returns per unit of risk. DUSK is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 17.00 in DUSK on September 4, 2024 and sell it today you would earn a total of 12.00 from holding DUSK or generate 70.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATA vs. DUSK
Performance |
| Timeline |
| DATA |
| DUSK |
DATA and DUSK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATA and DUSK
The main advantage of trading using opposite DATA and DUSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATA position performs unexpectedly, DUSK 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 DUSK will offset losses from the drop in DUSK's long position.The idea behind DATA and DUSK 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |