Correlation Between Uniswap Protocol and BTM
Can any of the company-specific risk be diversified away by investing in both Uniswap Protocol and BTM 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 BTM 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 BTM, you can compare the effects of market volatilities on Uniswap Protocol and BTM 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 BTM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniswap Protocol and BTM.
Diversification Opportunities for Uniswap Protocol and BTM
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Uniswap and BTM is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and BTM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTM 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 BTM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTM has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and BTM go up and down completely randomly.
Pair Corralation between Uniswap Protocol and BTM
Assuming the 90 days trading horizon Uniswap Protocol is expected to generate 4.01 times less return on investment than BTM. But when comparing it to its historical volatility, Uniswap Protocol Token is 3.08 times less risky than BTM. It trades about 0.02 of its potential returns per unit of risk. BTM is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.25 in BTM on August 27, 2024 and sell it today you would lose (0.74) from holding BTM or give up 58.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniswap Protocol Token vs. BTM
Performance |
| Timeline |
| Uniswap Protocol Token |
| BTM |
Uniswap Protocol and BTM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniswap Protocol and BTM
The main advantage of trading using opposite Uniswap Protocol and BTM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniswap Protocol position performs unexpectedly, BTM 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 BTM will offset losses from the drop in BTM'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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