Correlation Between Uniswap Protocol and Arbitrum
Can any of the company-specific risk be diversified away by investing in both Uniswap Protocol and Arbitrum 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 Uniswap Protocol and Arbitrum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniswap Protocol Token and Arbitrum, you can compare the effects of market volatilities on Uniswap Protocol and Arbitrum 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 Uniswap Protocol with a short position of Arbitrum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniswap Protocol and Arbitrum.
Diversification Opportunities for Uniswap Protocol and Arbitrum
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Uniswap and Arbitrum is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and Arbitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrum and Uniswap Protocol 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 Uniswap Protocol Token are associated (or correlated) with Arbitrum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrum has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and Arbitrum go up and down completely randomly.
Pair Corralation between Uniswap Protocol and Arbitrum
Assuming the 90 days trading horizon Uniswap Protocol is expected to generate 1.05 times less return on investment than Arbitrum. In addition to that, Uniswap Protocol is 1.28 times more volatile than Arbitrum. It trades about 0.29 of its total potential returns per unit of risk. Arbitrum is currently generating about 0.38 per unit of volatility. If you would invest 56.00 in Arbitrum on August 30, 2024 and sell it today you would earn a total of 40.00 from holding Arbitrum or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniswap Protocol Token vs. Arbitrum
Performance |
| Timeline |
| Uniswap Protocol Token |
| Arbitrum |
Uniswap Protocol and Arbitrum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniswap Protocol and Arbitrum
The main advantage of trading using opposite Uniswap Protocol and Arbitrum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniswap Protocol position performs unexpectedly, Arbitrum 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 Arbitrum will offset losses from the drop in Arbitrum's long position.| Uniswap Protocol vs. Staked Ether | Uniswap Protocol vs. EigenLayer | Uniswap Protocol vs. EOSDAC | Uniswap Protocol vs. BLZ |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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