Correlation Between Moodys and Coinbase Global
Can any of the company-specific risk be diversified away by investing in both Moodys and Coinbase Global 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 Moodys and Coinbase Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moodys and Coinbase Global, you can compare the effects of market volatilities on Moodys and Coinbase Global 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 Moodys with a short position of Coinbase Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moodys and Coinbase Global.
Diversification Opportunities for Moodys and Coinbase Global
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Moodys and Coinbase is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Moodys and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global and Moodys 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 Moodys are associated (or correlated) with Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of Moodys i.e., Moodys and Coinbase Global go up and down completely randomly.
Pair Corralation between Moodys and Coinbase Global
Considering the 90-day investment horizon Moodys is expected to generate 5.07 times less return on investment than Coinbase Global. But when comparing it to its historical volatility, Moodys is 2.64 times less risky than Coinbase Global. It trades about 0.05 of its potential returns per unit of risk. Coinbase Global is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 27,962 in Coinbase Global on October 25, 2024 and sell it today you would earn a total of 1,623 from holding Coinbase Global or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moodys vs. Coinbase Global
Performance |
| Timeline |
| Moodys |
| Coinbase Global |
Moodys and Coinbase Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moodys and Coinbase Global
The main advantage of trading using opposite Moodys and Coinbase Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moodys position performs unexpectedly, Coinbase Global 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 Coinbase Global will offset losses from the drop in Coinbase Global's long position.The idea behind Moodys and Coinbase Global 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.| Coinbase Global vs. Moodys | Coinbase Global vs. MSCI Inc | Coinbase Global vs. Intercontinental Exchange | Coinbase Global vs. CME Group |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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