Correlation Between Chia and Extended Market
Can any of the company-specific risk be diversified away by investing in both Chia and Extended Market 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 Chia and Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chia and Extended Market Index, you can compare the effects of market volatilities on Chia and Extended Market 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 Chia with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Extended Market.
Diversification Opportunities for Chia and Extended Market
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chia and Extended is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and Chia 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 Chia are associated (or correlated) with Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Chia i.e., Chia and Extended Market go up and down completely randomly.
Pair Corralation between Chia and Extended Market
Assuming the 90 days trading horizon Chia is expected to under-perform the Extended Market. In addition to that, Chia is 7.83 times more volatile than Extended Market Index. It trades about -0.13 of its total potential returns per unit of risk. Extended Market Index is currently generating about 0.19 per unit of volatility. If you would invest 2,052 in Extended Market Index on November 1, 2024 and sell it today you would earn a total of 64.00 from holding Extended Market Index or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Chia vs. Extended Market Index
Performance |
| Timeline |
| Chia |
| Extended Market Index |
Chia and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chia and Extended Market
The main advantage of trading using opposite Chia and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.The idea behind Chia and Extended Market Index 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.| Extended Market vs. Tiaa Cref Inflation Link | Extended Market vs. Ab Bond Inflation | Extended Market vs. Guidepath Managed Futures | Extended Market vs. Guggenheim Managed Futures |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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