Correlation Between Uniswap Protocol and DGD
Can any of the company-specific risk be diversified away by investing in both Uniswap Protocol and DGD 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 DGD 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 DGD, you can compare the effects of market volatilities on Uniswap Protocol and DGD 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 DGD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniswap Protocol and DGD.
Diversification Opportunities for Uniswap Protocol and DGD
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Uniswap and DGD is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and DGD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGD 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 DGD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGD has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and DGD go up and down completely randomly.
Pair Corralation between Uniswap Protocol and DGD
Assuming the 90 days trading horizon Uniswap Protocol Token is expected to generate 2.12 times more return on investment than DGD. However, Uniswap Protocol is 2.12 times more volatile than DGD. It trades about 0.26 of its potential returns per unit of risk. DGD is currently generating about 0.31 per unit of risk. If you would invest 811.00 in Uniswap Protocol Token on August 30, 2024 and sell it today you would earn a total of 454.00 from holding Uniswap Protocol Token or generate 55.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uniswap Protocol Token vs. DGD
Performance |
| Timeline |
| Uniswap Protocol Token |
| DGD |
Uniswap Protocol and DGD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniswap Protocol and DGD
The main advantage of trading using opposite Uniswap Protocol and DGD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniswap Protocol position performs unexpectedly, DGD 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 DGD will offset losses from the drop in DGD'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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