Correlation Between True USD and THR

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

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

Diversification Opportunities for True USD and THR

0.07

Correlation Coefficient

True USD  THR

Significant diversification

The 3 months correlation between True and THR is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding True USD and THR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THR and True USD 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 True USD are associated (or correlated) with THR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THR has no effect on the direction of True USD i.e., True USD and THR go up and down completely randomly.

Pair Corralation between True USD and THR

If you would invest  1,049,715  in THR on January 27, 2024 and sell it today you would earn a total of  0.00  from holding THR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

True USD  vs.  THR

True USD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in True USD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, True USD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

THR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with True USD and THR

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

The idea behind True USD and THR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.