Correlation Between Optimism and Theta Network
Can any of the company-specific risk be diversified away by investing in both Optimism and Theta Network 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 Theta Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimism and Theta Network, you can compare the effects of market volatilities on Optimism and Theta Network 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 Theta Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimism and Theta Network.
Diversification Opportunities for Optimism and Theta Network
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Optimism and Theta is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and Theta Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Network 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 Theta Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Network has no effect on the direction of Optimism i.e., Optimism and Theta Network go up and down completely randomly.
Pair Corralation between Optimism and Theta Network
Assuming the 90 days horizon Optimism is expected to generate 1.36 times less return on investment than Theta Network. In addition to that, Optimism is 1.31 times more volatile than Theta Network. It trades about 0.22 of its total potential returns per unit of risk. Theta Network is currently generating about 0.4 per unit of volatility. If you would invest 122.00 in Theta Network on August 27, 2024 and sell it today you would earn a total of 71.00 from holding Theta Network or generate 58.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optimism vs. Theta Network
Performance |
| Timeline |
| Optimism |
| Theta Network |
Optimism and Theta Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimism and Theta Network
The main advantage of trading using opposite Optimism and Theta Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism position performs unexpectedly, Theta Network 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 Theta Network will offset losses from the drop in Theta Network's long position.The idea behind Optimism and Theta Network 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.| Theta Network vs. Theta Fuel | Theta Network vs. Staked Ether | Theta Network vs. EigenLayer | Theta Network vs. EOSDAC |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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