Correlation Between Optimism and Cosmos
Can any of the company-specific risk be diversified away by investing in both Optimism and Cosmos 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 Optimism and Cosmos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimism and Cosmos, you can compare the effects of market volatilities on Optimism and Cosmos 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 Optimism with a short position of Cosmos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimism and Cosmos.
Diversification Opportunities for Optimism and Cosmos
Almost no diversification
The 3 months correlation between Optimism and Cosmos is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and Cosmos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos and Optimism 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 Optimism are associated (or correlated) with Cosmos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos has no effect on the direction of Optimism i.e., Optimism and Cosmos go up and down completely randomly.
Pair Corralation between Optimism and Cosmos
Assuming the 90 days horizon Optimism is expected to under-perform the Cosmos. In addition to that, Optimism is 1.09 times more volatile than Cosmos. It trades about -0.14 of its total potential returns per unit of risk. Cosmos is currently generating about -0.08 per unit of volatility. If you would invest 653.00 in Cosmos on November 1, 2024 and sell it today you would lose (73.00) from holding Cosmos or give up 11.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Optimism vs. Cosmos
Performance |
| Timeline |
| Optimism |
| Cosmos |
Optimism and Cosmos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimism and Cosmos
The main advantage of trading using opposite Optimism and Cosmos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism position performs unexpectedly, Cosmos 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 Cosmos will offset losses from the drop in Cosmos' long position.The idea behind Optimism and Cosmos 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |