Correlation Between WonderFi Technologies and Cronos
Can any of the company-specific risk be diversified away by investing in both WonderFi Technologies and Cronos 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 WonderFi Technologies and Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WonderFi Technologies and Cronos Group, you can compare the effects of market volatilities on WonderFi Technologies and Cronos 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 WonderFi Technologies with a short position of Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of WonderFi Technologies and Cronos.
Diversification Opportunities for WonderFi Technologies and Cronos
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WonderFi and Cronos is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding WonderFi Technologies and Cronos Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos Group and WonderFi Technologies 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 WonderFi Technologies are associated (or correlated) with Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos Group has no effect on the direction of WonderFi Technologies i.e., WonderFi Technologies and Cronos go up and down completely randomly.
Pair Corralation between WonderFi Technologies and Cronos
Assuming the 90 days trading horizon WonderFi Technologies is expected to generate 3.51 times more return on investment than Cronos. However, WonderFi Technologies is 3.51 times more volatile than Cronos Group. It trades about 0.05 of its potential returns per unit of risk. Cronos Group is currently generating about -0.15 per unit of risk. If you would invest 30.00 in WonderFi Technologies on November 2, 2024 and sell it today you would earn a total of 1.00 from holding WonderFi Technologies or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
WonderFi Technologies vs. Cronos Group
Performance |
| Timeline |
| WonderFi Technologies |
| Cronos Group |
WonderFi Technologies and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WonderFi Technologies and Cronos
The main advantage of trading using opposite WonderFi Technologies and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WonderFi Technologies position performs unexpectedly, Cronos 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 Cronos will offset losses from the drop in Cronos' long position.The idea behind WonderFi Technologies and Cronos Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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