Correlation Between Worldcoin and Gas
Can any of the company-specific risk be diversified away by investing in both Worldcoin and Gas 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 Worldcoin and Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldcoin and Gas, you can compare the effects of market volatilities on Worldcoin and Gas 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 Worldcoin with a short position of Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldcoin and Gas.
Diversification Opportunities for Worldcoin and Gas
Very poor diversification
The 3 months correlation between Worldcoin and Gas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Worldcoin and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gas and Worldcoin 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 Worldcoin are associated (or correlated) with Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gas has no effect on the direction of Worldcoin i.e., Worldcoin and Gas go up and down completely randomly.
Pair Corralation between Worldcoin and Gas
Assuming the 90 days trading horizon Worldcoin is expected to under-perform the Gas. But the crypto coin apears to be less risky and, when comparing its historical volatility, Worldcoin is 1.22 times less risky than Gas. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Gas is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 268.00 in Gas on August 27, 2024 and sell it today you would earn a total of 251.00 from holding Gas or generate 93.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 63.43% |
| Values | Daily Returns |
Worldcoin vs. Gas
Performance |
| Timeline |
| Worldcoin |
| Gas |
Worldcoin and Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldcoin and Gas
The main advantage of trading using opposite Worldcoin and Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldcoin position performs unexpectedly, Gas 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 Gas will offset losses from the drop in Gas' long position.The idea behind Worldcoin and Gas 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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