Correlation Between ZCash and Arweave
Can any of the company-specific risk be diversified away by investing in both ZCash and Arweave 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 ZCash and Arweave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZCash and Arweave, you can compare the effects of market volatilities on ZCash and Arweave 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 ZCash with a short position of Arweave. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZCash and Arweave.
Diversification Opportunities for ZCash and Arweave
Good diversification
The 3 months correlation between ZCash and Arweave is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ZCash and Arweave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arweave and ZCash 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 ZCash are associated (or correlated) with Arweave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arweave has no effect on the direction of ZCash i.e., ZCash and Arweave go up and down completely randomly.
Pair Corralation between ZCash and Arweave
Assuming the 90 days trading horizon ZCash is expected to generate 14.55 times less return on investment than Arweave. But when comparing it to its historical volatility, ZCash is 6.92 times less risky than Arweave. It trades about 0.02 of its potential returns per unit of risk. Arweave is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 949.00 in Arweave on August 24, 2024 and sell it today you would earn a total of 861.00 from holding Arweave or generate 90.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZCash vs. Arweave
Performance |
| Timeline |
| ZCash |
| Arweave |
ZCash and Arweave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZCash and Arweave
The main advantage of trading using opposite ZCash and Arweave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZCash position performs unexpectedly, Arweave 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 Arweave will offset losses from the drop in Arweave's long position.The idea behind ZCash and Arweave 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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