Correlation Between Flare and DKargo
Can any of the company-specific risk be diversified away by investing in both Flare and DKargo 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 Flare and DKargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flare and dKargo, you can compare the effects of market volatilities on Flare and DKargo 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 Flare with a short position of DKargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flare and DKargo.
Diversification Opportunities for Flare and DKargo
Poor diversification
The 3 months correlation between Flare and DKargo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Flare and dKargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dKargo and Flare 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 Flare are associated (or correlated) with DKargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dKargo has no effect on the direction of Flare i.e., Flare and DKargo go up and down completely randomly.
Pair Corralation between Flare and DKargo
Assuming the 90 days trading horizon Flare is expected to under-perform the DKargo. But the crypto coin apears to be less risky and, when comparing its historical volatility, Flare is 1.4 times less risky than DKargo. The crypto coin trades about -0.29 of its potential returns per unit of risk. The dKargo is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 3.73 in dKargo on February 7, 2024 and sell it today you would lose (0.73) from holding dKargo or give up 19.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Flare vs. dKargo
Performance |
Timeline |
Flare |
dKargo |
Flare and DKargo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Flare and DKargo
The main advantage of trading using opposite Flare and DKargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flare position performs unexpectedly, DKargo 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 DKargo will offset losses from the drop in DKargo's long position.The idea behind Flare and dKargo 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |