Correlation Between GRS and DigiByte
Can any of the company-specific risk be diversified away by investing in both GRS and DigiByte 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 GRS and DigiByte into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRS and DigiByte, you can compare the effects of market volatilities on GRS and DigiByte 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 GRS with a short position of DigiByte. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRS and DigiByte.
Diversification Opportunities for GRS and DigiByte
Poor diversification
The 3 months correlation between GRS and DigiByte is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding GRS and DigiByte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiByte and GRS 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 GRS are associated (or correlated) with DigiByte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiByte has no effect on the direction of GRS i.e., GRS and DigiByte go up and down completely randomly.
Pair Corralation between GRS and DigiByte
Assuming the 90 days trading horizon GRS is expected to generate 0.89 times more return on investment than DigiByte. However, GRS is 1.12 times less risky than DigiByte. It trades about 0.4 of its potential returns per unit of risk. DigiByte is currently generating about 0.33 per unit of risk. If you would invest 34.00 in GRS on August 29, 2024 and sell it today you would earn a total of 30.00 from holding GRS or generate 88.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GRS vs. DigiByte
Performance |
| Timeline |
| GRS |
| DigiByte |
GRS and DigiByte Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GRS and DigiByte
The main advantage of trading using opposite GRS and DigiByte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRS position performs unexpectedly, DigiByte 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 DigiByte will offset losses from the drop in DigiByte's long position.The idea behind GRS and DigiByte 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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