Correlation Between Open Network and HEDG
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By analyzing existing cross correlation between The Open Network and HEDG, you can compare the effects of market volatilities on Open Network and HEDG 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 Open Network with a short position of HEDG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Network and HEDG.
Diversification Opportunities for Open Network and HEDG
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Open and HEDG is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Open Network and HEDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEDG and Open Network 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 The Open Network are associated (or correlated) with HEDG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEDG has no effect on the direction of Open Network i.e., Open Network and HEDG go up and down completely randomly.
Pair Corralation between Open Network and HEDG
Assuming the 90 days trading horizon Open Network is expected to generate 4.19 times less return on investment than HEDG. But when comparing it to its historical volatility, The Open Network is 6.34 times less risky than HEDG. It trades about 0.11 of its potential returns per unit of risk. HEDG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.73 in HEDG on January 30, 2024 and sell it today you would lose (2.12) from holding HEDG or give up 56.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
The Open Network vs. HEDG
Performance |
Timeline |
Open Network |
HEDG |
Open Network and HEDG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Open Network and HEDG
The main advantage of trading using opposite Open Network and HEDG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Network position performs unexpectedly, HEDG 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 HEDG will offset losses from the drop in HEDG's long position.The idea behind The Open Network and HEDG 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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