Correlation Between EMC2 and Dogecoin
Can any of the company-specific risk be diversified away by investing in both EMC2 and Dogecoin 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 EMC2 and Dogecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMC2 and Dogecoin, you can compare the effects of market volatilities on EMC2 and Dogecoin 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 EMC2 with a short position of Dogecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMC2 and Dogecoin.
Diversification Opportunities for EMC2 and Dogecoin
Almost no diversification
The 3 months correlation between EMC2 and Dogecoin is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding EMC2 and Dogecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogecoin and EMC2 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 EMC2 are associated (or correlated) with Dogecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogecoin has no effect on the direction of EMC2 i.e., EMC2 and Dogecoin go up and down completely randomly.
Pair Corralation between EMC2 and Dogecoin
Assuming the 90 days trading horizon EMC2 is expected to generate 2.68 times less return on investment than Dogecoin. But when comparing it to its historical volatility, EMC2 is 3.54 times less risky than Dogecoin. It trades about 0.39 of its potential returns per unit of risk. Dogecoin is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Dogecoin on August 30, 2024 and sell it today you would earn a total of 23.00 from holding Dogecoin or generate 135.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMC2 vs. Dogecoin
Performance |
| Timeline |
| EMC2 |
| Dogecoin |
EMC2 and Dogecoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMC2 and Dogecoin
The main advantage of trading using opposite EMC2 and Dogecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMC2 position performs unexpectedly, Dogecoin 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 Dogecoin will offset losses from the drop in Dogecoin's long position.The idea behind EMC2 and Dogecoin 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |