Correlation Between Uniswap Protocol and FARM

Can any of the company-specific risk be diversified away by investing in both Uniswap Protocol and FARM 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 FARM 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 FARM, you can compare the effects of market volatilities on Uniswap Protocol and FARM 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 FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniswap Protocol and FARM.

Diversification Opportunities for Uniswap Protocol and FARM

-0.32

Correlation Coefficient

Uniswap Protocol  FARM

Very good diversification

The 3 months correlation between Uniswap and FARM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and FARM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 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 FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and FARM go up and down completely randomly.

Pair Corralation between Uniswap Protocol and FARM

Assuming the 90 days trading horizon Uniswap Protocol Token is expected to generate 2.41 times more return on investment than FARM. However, Uniswap Protocol is 2.41 times more volatile than FARM. It trades about 0.14 of its potential returns per unit of risk. FARM is currently generating about 0.01 per unit of risk. If you would invest  604.00  in Uniswap Protocol Token on April 22, 2025 and sell it today you would earn a total of  414.00  from holding Uniswap Protocol Token or generate 68.54% return on investment over 90 days.

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

Uniswap Protocol Token  vs.  FARM

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 10 (%) 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.

FARM

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Uniswap Protocol and FARM

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

The idea behind Uniswap Protocol Token and FARM 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.