Correlation Between Velodrome Finance and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Velodrome Finance and Dow Jones 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 Velodrome Finance and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velodrome Finance and Dow Jones Industrial, you can compare the effects of market volatilities on Velodrome Finance and Dow Jones 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 Velodrome Finance with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velodrome Finance and Dow Jones.
Diversification Opportunities for Velodrome Finance and Dow Jones
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Velodrome and Dow is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Velodrome Finance and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Velodrome Finance 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 Velodrome Finance are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Velodrome Finance i.e., Velodrome Finance and Dow Jones go up and down completely randomly.
Pair Corralation between Velodrome Finance and Dow Jones
Assuming the 90 days trading horizon Velodrome Finance is expected to generate 8.29 times more return on investment than Dow Jones. However, Velodrome Finance is 8.29 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 8.75 in Velodrome Finance on August 27, 2024 and sell it today you would earn a total of 1.25 from holding Velodrome Finance or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Velodrome Finance vs. Dow Jones Industrial
Performance |
| Timeline |
Velodrome Finance and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Velodrome Finance
Pair trading matchups for Velodrome Finance
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Velodrome Finance and Dow Jones
The main advantage of trading using opposite Velodrome Finance and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velodrome Finance position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Velodrome Finance vs. Solana | Velodrome Finance vs. XRP | Velodrome Finance vs. Sui | Velodrome Finance vs. Staked Ether |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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