Correlation Between FTC and XMR
Can any of the company-specific risk be diversified away by investing in both FTC and XMR 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 FTC and XMR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTC and XMR, you can compare the effects of market volatilities on FTC and XMR 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 FTC with a short position of XMR. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTC and XMR.
Diversification Opportunities for FTC and XMR
Very good diversification
The 3 months correlation between FTC and XMR is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding FTC and XMR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMR and FTC 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 FTC are associated (or correlated) with XMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMR has no effect on the direction of FTC i.e., FTC and XMR go up and down completely randomly.
Pair Corralation between FTC and XMR
Assuming the 90 days trading horizon FTC is expected to generate 1.04 times more return on investment than XMR. However, FTC is 1.04 times more volatile than XMR. It trades about 0.1 of its potential returns per unit of risk. XMR is currently generating about 0.05 per unit of risk. If you would invest 0.21 in FTC on August 24, 2024 and sell it today you would earn a total of 0.09 from holding FTC or generate 42.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTC vs. XMR
Performance |
| Timeline |
| FTC |
| XMR |
FTC and XMR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTC and XMR
The main advantage of trading using opposite FTC and XMR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC position performs unexpectedly, XMR 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 XMR will offset losses from the drop in XMR's long position.The idea behind FTC and XMR 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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