Correlation Between Puffer and UPP

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Can any of the company-specific risk be diversified away by investing in both Puffer and UPP 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 Puffer and UPP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puffer and UPP, you can compare the effects of market volatilities on Puffer and UPP 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 Puffer with a short position of UPP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puffer and UPP.

Diversification Opportunities for Puffer and UPP

PufferUPPDiversified AwayPufferUPPDiversified Away100%
0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Puffer and UPP is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Puffer and UPP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPP and Puffer 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 Puffer are associated (or correlated) with UPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPP has no effect on the direction of Puffer i.e., Puffer and UPP go up and down completely randomly.

Pair Corralation between Puffer and UPP

Assuming the 90 days trading horizon Puffer is expected to under-perform the UPP. But the crypto coin apears to be less risky and, when comparing its historical volatility, Puffer is 11.77 times less risky than UPP. The crypto coin trades about -0.35 of its potential returns per unit of risk. The UPP is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  9.56  in UPP on November 23, 2024 and sell it today you would lose (0.53) from holding UPP or give up 5.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Puffer  vs.  UPP

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50050100150200
JavaScript chart by amCharts 3.21.15PUFFER UPP
       Timeline  
Puffer 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Puffer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Puffer sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.50.60.70.80.91
UPP 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in UPP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UPP exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.030.040.050.060.070.080.09

Puffer and UPP Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-39.45-29.54-19.64-9.740.1710.2120.5830.9641.34 0.00050.00100.00150.00200.0025
JavaScript chart by amCharts 3.21.15PUFFER UPP
       Returns  

Pair Trading with Puffer and UPP

The main advantage of trading using opposite Puffer and UPP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puffer position performs unexpectedly, UPP 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 UPP will offset losses from the drop in UPP's long position.
The idea behind Puffer and UPP 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.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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