Correlation Between Uniswap Protocol and PancakeSwap

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

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

Diversification Opportunities for Uniswap Protocol and PancakeSwap

0.66

Correlation Coefficient

Uniswap Protocol  PancakeSwap

Poor diversification

The 3 months correlation between Uniswap and PancakeSwap is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and PancakeSwap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PancakeSwap and Uniswap Protocol 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 Uniswap Protocol Token are associated (or correlated) with PancakeSwap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PancakeSwap has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and PancakeSwap go up and down completely randomly.

Pair Corralation between Uniswap Protocol and PancakeSwap

Assuming the 90 days trading horizon Uniswap Protocol Token is expected to generate 1.65 times more return on investment than PancakeSwap. However, Uniswap Protocol is 1.65 times more volatile than PancakeSwap. It trades about 0.15 of its potential returns per unit of risk. PancakeSwap is currently generating about 0.14 per unit of risk. If you would invest  581.00  in Uniswap Protocol Token on April 23, 2025 and sell it today you would earn a total of  493.00  from holding Uniswap Protocol Token or generate 84.85% return on investment over 90 days.

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

Uniswap Protocol Token  vs.  PancakeSwap

Uniswap Protocol Token

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Uniswap Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

PancakeSwap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PancakeSwap are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, PancakeSwap exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uniswap Protocol and PancakeSwap

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

The idea behind Uniswap Protocol Token and PancakeSwap 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.

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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.