Correlation Between Polygon Ecosystem and CAPP
Can any of the company-specific risk be diversified away by investing in both Polygon Ecosystem and CAPP 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 Polygon Ecosystem and CAPP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygon Ecosystem Token and CAPP, you can compare the effects of market volatilities on Polygon Ecosystem and CAPP 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 Polygon Ecosystem with a short position of CAPP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygon Ecosystem and CAPP.
Diversification Opportunities for Polygon Ecosystem and CAPP
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polygon and CAPP is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Polygon Ecosystem Token and CAPP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAPP and Polygon Ecosystem 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 Polygon Ecosystem Token are associated (or correlated) with CAPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAPP has no effect on the direction of Polygon Ecosystem i.e., Polygon Ecosystem and CAPP go up and down completely randomly.
Pair Corralation between Polygon Ecosystem and CAPP
Assuming the 90 days trading horizon Polygon Ecosystem Token is expected to under-perform the CAPP. In addition to that, Polygon Ecosystem is 2.5 times more volatile than CAPP. It trades about -0.1 of its total potential returns per unit of risk. CAPP is currently generating about 0.31 per unit of volatility. If you would invest 0.01 in CAPP on October 31, 2024 and sell it today you would earn a total of 0.00 from holding CAPP or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polygon Ecosystem Token vs. CAPP
Performance |
| Timeline |
| Polygon Ecosystem Token |
| CAPP |
Polygon Ecosystem and CAPP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polygon Ecosystem and CAPP
The main advantage of trading using opposite Polygon Ecosystem and CAPP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon Ecosystem position performs unexpectedly, CAPP 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 CAPP will offset losses from the drop in CAPP's long position.| Polygon Ecosystem vs. Staked Ether | Polygon Ecosystem vs. Phala Network | Polygon Ecosystem vs. EigenLayer | Polygon Ecosystem 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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