Correlation Between Arbitrum and Fartcoin

Can any of the company-specific risk be diversified away by investing in both Arbitrum and Fartcoin 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 Arbitrum and Fartcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arbitrum and Fartcoin, you can compare the effects of market volatilities on Arbitrum and Fartcoin 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 Arbitrum with a short position of Fartcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbitrum and Fartcoin.

Diversification Opportunities for Arbitrum and Fartcoin

0.82

Correlation Coefficient

Arbitrum  Fartcoin

Very poor diversification

The 3 months correlation between Arbitrum and Fartcoin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Arbitrum and Fartcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fartcoin and Arbitrum 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 Arbitrum are associated (or correlated) with Fartcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fartcoin has no effect on the direction of Arbitrum i.e., Arbitrum and Fartcoin go up and down completely randomly.

Pair Corralation between Arbitrum and Fartcoin

Assuming the 90 days trading horizon Arbitrum is expected to generate 0.8 times more return on investment than Fartcoin. However, Arbitrum is 1.25 times less risky than Fartcoin. It trades about 0.11 of its potential returns per unit of risk. Fartcoin is currently generating about 0.07 per unit of risk. If you would invest  32.00  in Arbitrum on April 20, 2025 and sell it today you would earn a total of  13.00  from holding Arbitrum or generate 40.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Arbitrum  vs.  Fartcoin

Arbitrum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbitrum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Arbitrum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fartcoin

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fartcoin are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental indicators, Fartcoin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbitrum and Fartcoin

The main advantage of trading using opposite Arbitrum and Fartcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbitrum position performs unexpectedly, Fartcoin 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 Fartcoin will offset losses from the drop in Fartcoin's long position.

The idea behind Arbitrum and Fartcoin 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.