Correlation Between Kava and Cardano
Can any of the company-specific risk be diversified away by investing in both Kava and Cardano 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 Kava and Cardano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kava and Cardano, you can compare the effects of market volatilities on Kava and Cardano 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 Kava with a short position of Cardano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kava and Cardano.
Diversification Opportunities for Kava and Cardano
Poor diversification
The 3 months correlation between Kava and Cardano is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Kava and Cardano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardano and Kava 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 Kava are associated (or correlated) with Cardano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardano has no effect on the direction of Kava i.e., Kava and Cardano go up and down completely randomly.
Pair Corralation between Kava and Cardano
Assuming the 90 days trading horizon Kava is expected to under-perform the Cardano. In addition to that, Kava is 1.05 times more volatile than Cardano. It trades about -0.01 of its total potential returns per unit of risk. Cardano is currently generating about 0.08 per unit of volatility. If you would invest 32.00 in Cardano on August 23, 2024 and sell it today you would earn a total of 51.00 from holding Cardano or generate 159.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kava vs. Cardano
Performance |
| Timeline |
| Kava |
| Cardano |
Kava and Cardano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kava and Cardano
The main advantage of trading using opposite Kava and Cardano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kava position performs unexpectedly, Cardano 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 Cardano will offset losses from the drop in Cardano's long position.The idea behind Kava and Cardano 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
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Global Correlations Find global opportunities by holding instruments from different markets |