Correlation Between DENT and BounceBit
Can any of the company-specific risk be diversified away by investing in both DENT and BounceBit 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 DENT and BounceBit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DENT and BounceBit, you can compare the effects of market volatilities on DENT and BounceBit 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 DENT with a short position of BounceBit. Check out your portfolio center. Please also check ongoing floating volatility patterns of DENT and BounceBit.
Diversification Opportunities for DENT and BounceBit
Poor diversification
The 3 months correlation between DENT and BounceBit is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding DENT and BounceBit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BounceBit and DENT 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 DENT are associated (or correlated) with BounceBit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BounceBit has no effect on the direction of DENT i.e., DENT and BounceBit go up and down completely randomly.
Pair Corralation between DENT and BounceBit
Assuming the 90 days trading horizon DENT is expected to generate 0.93 times more return on investment than BounceBit. However, DENT is 1.08 times less risky than BounceBit. It trades about -0.3 of its potential returns per unit of risk. BounceBit is currently generating about -0.45 per unit of risk. If you would invest 0.13 in DENT on November 8, 2024 and sell it today you would lose (0.05) from holding DENT or give up 39.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DENT vs. BounceBit
Performance |
| Timeline |
| DENT |
| BounceBit |
DENT and BounceBit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DENT and BounceBit
The main advantage of trading using opposite DENT and BounceBit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DENT position performs unexpectedly, BounceBit 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 BounceBit will offset losses from the drop in BounceBit's long position.The idea behind DENT and BounceBit 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| 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 |