Correlation Between Toncoin and Stellar
Can any of the company-specific risk be diversified away by investing in both Toncoin and Stellar 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 Toncoin and Stellar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toncoin and Stellar, you can compare the effects of market volatilities on Toncoin and Stellar 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 Toncoin with a short position of Stellar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toncoin and Stellar.
Diversification Opportunities for Toncoin and Stellar
Weak diversification
The 3 months correlation between Toncoin and Stellar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Toncoin and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar and Toncoin 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 Toncoin are associated (or correlated) with Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of Toncoin i.e., Toncoin and Stellar go up and down completely randomly.
Pair Corralation between Toncoin and Stellar
Assuming the 90 days trading horizon Toncoin is expected to generate 9.15 times less return on investment than Stellar. But when comparing it to its historical volatility, Toncoin is 3.51 times less risky than Stellar. It trades about 0.21 of its potential returns per unit of risk. Stellar is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 9.66 in Stellar on August 28, 2024 and sell it today you would earn a total of 38.34 from holding Stellar or generate 396.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toncoin vs. Stellar
Performance |
| Timeline |
| Toncoin |
| Stellar |
Toncoin and Stellar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toncoin and Stellar
The main advantage of trading using opposite Toncoin and Stellar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toncoin position performs unexpectedly, Stellar 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 Stellar will offset losses from the drop in Stellar's long position.The idea behind Toncoin and Stellar 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.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |