Correlation Between Stellar and Worldcoin
Can any of the company-specific risk be diversified away by investing in both Stellar and Worldcoin 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 Stellar and Worldcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Worldcoin, you can compare the effects of market volatilities on Stellar and Worldcoin 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 Stellar with a short position of Worldcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Worldcoin.
Diversification Opportunities for Stellar and Worldcoin
Very weak diversification
The 3 months correlation between Stellar and Worldcoin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Worldcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldcoin and Stellar 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 Stellar are associated (or correlated) with Worldcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldcoin has no effect on the direction of Stellar i.e., Stellar and Worldcoin go up and down completely randomly.
Pair Corralation between Stellar and Worldcoin
Assuming the 90 days trading horizon Stellar is expected to generate 2.52 times more return on investment than Worldcoin. However, Stellar is 2.52 times more volatile than Worldcoin. It trades about 0.54 of its potential returns per unit of risk. Worldcoin is currently generating about 0.13 per unit of risk. If you would invest 9.66 in Stellar on August 28, 2024 and sell it today you would earn a total of 38.34 from holding Stellar or generate 396.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stellar vs. Worldcoin
Performance |
| Timeline |
| Stellar |
| Worldcoin |
Stellar and Worldcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Worldcoin
The main advantage of trading using opposite Stellar and Worldcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Worldcoin 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 Worldcoin will offset losses from the drop in Worldcoin's long position.The idea behind Stellar and Worldcoin 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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