Correlation Between Pudgy Penguins and LOOM
Can any of the company-specific risk be diversified away by investing in both Pudgy Penguins and LOOM 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 Pudgy Penguins and LOOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pudgy Penguins and LOOM, you can compare the effects of market volatilities on Pudgy Penguins and LOOM 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 Pudgy Penguins with a short position of LOOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pudgy Penguins and LOOM.
Diversification Opportunities for Pudgy Penguins and LOOM
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pudgy and LOOM is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pudgy Penguins and LOOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOOM and Pudgy Penguins 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 Pudgy Penguins are associated (or correlated) with LOOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOOM has no effect on the direction of Pudgy Penguins i.e., Pudgy Penguins and LOOM go up and down completely randomly.
Pair Corralation between Pudgy Penguins and LOOM
Assuming the 90 days trading horizon Pudgy Penguins is expected to generate 0.77 times more return on investment than LOOM. However, Pudgy Penguins is 1.3 times less risky than LOOM. It trades about 0.26 of its potential returns per unit of risk. LOOM is currently generating about -0.24 per unit of risk. If you would invest 0.73 in Pudgy Penguins on April 23, 2025 and sell it today you would earn a total of 2.36 from holding Pudgy Penguins or generate 322.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pudgy Penguins vs. LOOM
Performance |
Timeline |
Pudgy Penguins |
LOOM |
Pudgy Penguins and LOOM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pudgy Penguins and LOOM
The main advantage of trading using opposite Pudgy Penguins and LOOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pudgy Penguins position performs unexpectedly, LOOM 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 LOOM will offset losses from the drop in LOOM's long position.Pudgy Penguins vs. Staked Ether | Pudgy Penguins vs. EigenLayer | Pudgy Penguins vs. EOSDAC | Pudgy Penguins vs. BLZ |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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