Correlation Between TRON and First Digital

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

By analyzing existing cross correlation between TRON and First Digital USD, you can compare the effects of market volatilities on TRON and First Digital 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 TRON with a short position of First Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and First Digital.

Diversification Opportunities for TRON and First Digital

-0.1

Correlation Coefficient

TRON  First Digital

Good diversification

The 3 months correlation between TRON and First is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding TRON and First Digital USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Digital USD and TRON 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 TRON are associated (or correlated) with First Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Digital USD has no effect on the direction of TRON i.e., TRON and First Digital go up and down completely randomly.

Pair Corralation between TRON and First Digital

Assuming the 90 days trading horizon TRON is expected to generate 34.13 times less return on investment than First Digital. But when comparing it to its historical volatility, TRON is 55.16 times less risky than First Digital. It trades about 0.18 of its potential returns per unit of risk. First Digital USD is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  100.00  in First Digital USD on April 21, 2025 and sell it today you would earn a total of  0.00  from holding First Digital USD or generate 0.0% return on investment over 90 days.

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

TRON  vs.  First Digital USD

TRON

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Digital USD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Digital USD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, First Digital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRON and First Digital

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

The idea behind TRON and First Digital USD 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.