Correlation Between Sui and CoW Protocol
Can any of the company-specific risk be diversified away by investing in both Sui and CoW Protocol 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 Sui and CoW Protocol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sui and CoW Protocol, you can compare the effects of market volatilities on Sui and CoW Protocol 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 Sui with a short position of CoW Protocol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sui and CoW Protocol.
Diversification Opportunities for Sui and CoW Protocol
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sui and CoW is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sui and CoW Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoW Protocol and Sui 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 Sui are associated (or correlated) with CoW Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoW Protocol has no effect on the direction of Sui i.e., Sui and CoW Protocol go up and down completely randomly.
Pair Corralation between Sui and CoW Protocol
Assuming the 90 days trading horizon Sui is expected to generate 1.05 times less return on investment than CoW Protocol. But when comparing it to its historical volatility, Sui is 1.53 times less risky than CoW Protocol. It trades about 0.08 of its potential returns per unit of risk. CoW Protocol is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 27.00 in CoW Protocol on November 9, 2024 and sell it today you would earn a total of 11.00 from holding CoW Protocol or generate 40.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sui vs. CoW Protocol
Performance |
| Timeline |
| Sui |
| CoW Protocol |
Sui and CoW Protocol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sui and CoW Protocol
The main advantage of trading using opposite Sui and CoW Protocol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sui position performs unexpectedly, CoW Protocol 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 CoW Protocol will offset losses from the drop in CoW Protocol's long position.The idea behind Sui and CoW Protocol 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.| CoW Protocol vs. ORN | CoW Protocol vs. The Graph | CoW Protocol vs. Staked Ether | CoW Protocol vs. Phala Network |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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