Correlation Between USDD and Polkadot

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

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

Diversification Opportunities for USDD and Polkadot

0.22

Correlation Coefficient

USDD  Polkadot

Modest diversification

The 3 months correlation between USDD and Polkadot is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding USDD and Polkadot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polkadot and USDD 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 USDD are associated (or correlated) with Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polkadot has no effect on the direction of USDD i.e., USDD and Polkadot go up and down completely randomly.

Pair Corralation between USDD and Polkadot

Assuming the 90 days trading horizon USDD is expected to generate 28.41 times less return on investment than Polkadot. But when comparing it to its historical volatility, USDD is 3.75 times less risky than Polkadot. It trades about 0.01 of its potential returns per unit of risk. Polkadot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  401.00  in Polkadot on April 20, 2025 and sell it today you would earn a total of  22.00  from holding Polkadot or generate 5.49% return on investment over 90 days.

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

USDD  vs.  Polkadot

USDD

Risk-Adjusted Performance

Very Weak

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

Polkadot

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Polkadot are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Polkadot may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with USDD and Polkadot

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

The idea behind USDD and Polkadot 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.