Correlation Between Compound Governance and Monero

Can any of the company-specific risk be diversified away by investing in both Compound Governance and Monero 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 Monero 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 Monero, you can compare the effects of market volatilities on Compound Governance and Monero 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 Monero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compound Governance and Monero.

Diversification Opportunities for Compound Governance and Monero

0.09

Correlation Coefficient

Compound Governance  Monero

Significant diversification

The 3 months correlation between Compound and Monero is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Compound Governance Token and Monero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monero 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 Monero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monero has no effect on the direction of Compound Governance i.e., Compound Governance and Monero go up and down completely randomly.

Pair Corralation between Compound Governance and Monero

Assuming the 90 days trading horizon Compound Governance Token is expected to generate 0.98 times more return on investment than Monero. However, Compound Governance Token is 1.02 times less risky than Monero. It trades about 0.01 of its potential returns per unit of risk. Monero is currently generating about -0.03 per unit of risk. If you would invest  5,681  in Compound Governance Token on January 19, 2024 and sell it today you would lose (416.00) from holding Compound Governance Token or give up 7.32% of portfolio value over 90 days.

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

Compound Governance Token  vs.  Monero

Compound Governance Token

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compound Governance Token has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Compound Governance is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Monero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for Monero shareholders.

Pair Trading with Compound Governance and Monero

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

The idea behind Compound Governance Token and Monero 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.