Correlation Between Marinade and Flare
Can any of the company-specific risk be diversified away by investing in both Marinade and Flare 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 Marinade and Flare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marinade and Flare, you can compare the effects of market volatilities on Marinade and Flare 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 Marinade with a short position of Flare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marinade and Flare.
Diversification Opportunities for Marinade and Flare
Modest diversification
The 3 months correlation between Marinade and Flare is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Marinade and Flare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flare and Marinade 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 Marinade are associated (or correlated) with Flare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flare has no effect on the direction of Marinade i.e., Marinade and Flare go up and down completely randomly.
Pair Corralation between Marinade and Flare
Assuming the 90 days trading horizon Marinade is expected to under-perform the Flare. In addition to that, Marinade is 1.76 times more volatile than Flare. It trades about -0.33 of its total potential returns per unit of risk. Flare is currently generating about -0.22 per unit of volatility. If you would invest 3.82 in Flare on January 29, 2024 and sell it today you would lose (0.73) from holding Flare or give up 19.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Marinade vs. Flare
Performance |
Timeline |
Marinade |
Flare |
Marinade and Flare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marinade and Flare
The main advantage of trading using opposite Marinade and Flare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marinade position performs unexpectedly, Flare 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 Flare will offset losses from the drop in Flare's long position.Marinade vs. Marinade Staked SOL | Marinade vs. Staked Ether | Marinade vs. XCAD Network | Marinade vs. Phala Network |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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