Correlation Between Swell Network and Cetus Protocol
Can any of the company-specific risk be diversified away by investing in both Swell Network and Cetus 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 Swell Network and Cetus Protocol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swell Network and Cetus Protocol, you can compare the effects of market volatilities on Swell Network and Cetus 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 Swell Network with a short position of Cetus Protocol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swell Network and Cetus Protocol.
Diversification Opportunities for Swell Network and Cetus Protocol
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Swell and Cetus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Swell Network and Cetus Protocol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cetus Protocol and Swell Network 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 Swell Network are associated (or correlated) with Cetus Protocol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cetus Protocol has no effect on the direction of Swell Network i.e., Swell Network and Cetus Protocol go up and down completely randomly.
Pair Corralation between Swell Network and Cetus Protocol
Assuming the 90 days trading horizon Swell Network is expected to generate 0.73 times more return on investment than Cetus Protocol. However, Swell Network is 1.37 times less risky than Cetus Protocol. It trades about -0.51 of its potential returns per unit of risk. Cetus Protocol is currently generating about -0.44 per unit of risk. If you would invest 2.87 in Swell Network on November 8, 2024 and sell it today you would lose (1.68) from holding Swell Network or give up 58.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swell Network vs. Cetus Protocol
Performance |
| Timeline |
| Swell Network |
| Cetus Protocol |
Swell Network and Cetus Protocol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swell Network and Cetus Protocol
The main advantage of trading using opposite Swell Network and Cetus Protocol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swell Network position performs unexpectedly, Cetus 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 Cetus Protocol will offset losses from the drop in Cetus Protocol's long position.The idea behind Swell Network and Cetus 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.| Cetus Protocol vs. XRP | Cetus Protocol vs. Solana | Cetus Protocol vs. Sui | Cetus Protocol vs. Staked Ether |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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