Correlation Between FTX Token and Stellar

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

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

Diversification Opportunities for FTX Token and Stellar

0.38

Correlation Coefficient

FTX Token  Stellar

Weak diversification

The 3 months correlation between FTX and Stellar is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and Stellar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar 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 Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar has no effect on the direction of FTX Token i.e., FTX Token and Stellar go up and down completely randomly.

Pair Corralation between FTX Token and Stellar

Assuming the 90 days trading horizon FTX Token is expected to under-perform the Stellar. In addition to that, FTX Token is 1.83 times more volatile than Stellar. It trades about -0.18 of its total potential returns per unit of risk. Stellar is currently generating about -0.16 per unit of volatility. If you would invest  13.00  in Stellar on January 26, 2024 and sell it today you would lose (2.00) from holding Stellar or give up 15.38% of portfolio value over 90 days.

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

FTX Token  vs.  Stellar

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.

Stellar

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind FTX Token and Stellar 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.