Correlation Between Compound Governance and NEM
Can any of the company-specific risk be diversified away by investing in both Compound Governance and NEM 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 Compound Governance and NEM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compound Governance Token and NEM, you can compare the effects of market volatilities on Compound Governance and NEM 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 Compound Governance with a short position of NEM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compound Governance and NEM.
Diversification Opportunities for Compound Governance and NEM
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compound and NEM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Compound Governance Token and NEM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEM and Compound Governance 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 Compound Governance Token are associated (or correlated) with NEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEM has no effect on the direction of Compound Governance i.e., Compound Governance and NEM go up and down completely randomly.
Pair Corralation between Compound Governance and NEM
Assuming the 90 days trading horizon Compound Governance Token is expected to under-perform the NEM. But the crypto coin apears to be less risky and, when comparing its historical volatility, Compound Governance Token is 1.05 times less risky than NEM. The crypto coin trades about -0.22 of its potential returns per unit of risk. The NEM is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 4.85 in NEM on January 20, 2024 and sell it today you would lose (1.30) from holding NEM or give up 26.8% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Compound Governance Token vs. NEM
Performance |
Timeline |
Compound Governance Token |
NEM |
Compound Governance and NEM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Compound Governance and NEM
The main advantage of trading using opposite Compound Governance and NEM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compound Governance position performs unexpectedly, NEM 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 NEM will offset losses from the drop in NEM's long position.Compound Governance vs. Solana | Compound Governance vs. XRP | Compound Governance vs. The Open Network | Compound Governance vs. Staked Ether |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Positions Ratings 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 | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |