Correlation Between FTX Token and TMTG

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

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

Diversification Opportunities for FTX Token and TMTG

0.0

Correlation Coefficient

FTX Token  TMTG

Pay attention - limited upside

The 3 months correlation between FTX and TMTG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and TMTG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMTG and FTX Token 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 FTX Token are associated (or correlated) with TMTG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMTG has no effect on the direction of FTX Token i.e., FTX Token and TMTG go up and down completely randomly.

Pair Corralation between FTX Token and TMTG

Assuming the 90 days trading horizon FTX Token is expected to generate 1.95 times more return on investment than TMTG. However, FTX Token is 1.95 times more volatile than TMTG. It trades about 0.01 of its potential returns per unit of risk. TMTG is currently generating about -0.02 per unit of risk. If you would invest  3,779  in FTX Token on January 21, 2024 and sell it today you would lose (3,654) from holding FTX Token or give up 96.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	71.4%
Values	Daily Returns

FTX Token  vs.  TMTG

FTX Token

Risk-Adjusted Performance

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Very Weak

Over the last 90 days FTX Token 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 FTX Token shareholders.

TMTG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with FTX Token and TMTG

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

The idea behind FTX Token and TMTG 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.