Correlation Between FTX Token and Tether

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

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

Diversification Opportunities for FTX Token and Tether

0.0

Correlation Coefficient

FTX Token  Tether

Pay attention - limited upside

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

Pair Corralation between FTX Token and Tether

If you would invest  2,891  in FTX Token on January 20, 2024 and sell it today you would lose (2,765) from holding FTX Token or give up 95.64% of portfolio value over 90 days.

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

FTX Token  vs.  Tether

FTX Token

Risk-Adjusted Performance

0 of 100

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.

Tether

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tether has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Tether 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 Tether

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

The idea behind FTX Token and Tether 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.