Correlation Between Cosmos and True USD

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

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

Diversification Opportunities for Cosmos and True USD

0.38

Correlation Coefficient

Cosmos  True USD

Weak diversification

The 3 months correlation between Cosmos and True is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and True USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True USD and Cosmos 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 Cosmos are associated (or correlated) with True USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True USD has no effect on the direction of Cosmos i.e., Cosmos and True USD go up and down completely randomly.

Pair Corralation between Cosmos and True USD

Assuming the 90 days trading horizon Cosmos is expected to under-perform the True USD. In addition to that, Cosmos is 14.92 times more volatile than True USD. It trades about 0.0 of its total potential returns per unit of risk. True USD is currently generating about 0.0 per unit of volatility. If you would invest  100.00  in True USD on January 19, 2024 and sell it today you would earn a total of  0.00  from holding True USD or generate 0.0% return on investment over 90 days.

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

Cosmos  vs.  True USD

Cosmos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cosmos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Cosmos shareholders.

True USD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in True USD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, True USD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cosmos and True USD

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

The idea behind Cosmos and True USD 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.