Correlation Between Tether and Polygon

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

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

Diversification Opportunities for Tether and Polygon

0.0

Correlation Coefficient

Tether  Polygon

Pay attention - limited upside

The 3 months correlation between Tether and Polygon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tether and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon and Tether 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 Tether are associated (or correlated) with Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of Tether i.e., Tether and Polygon go up and down completely randomly.

Pair Corralation between Tether and Polygon

Assuming the 90 days trading horizon Tether is not expected to generate positive returns. However, Tether is 56.69 times less risky than Polygon. It waists most of its returns potential to compensate for thr risk taken. Polygon is generating about -0.02 per unit of risk. If you would invest  100.00  in Tether on January 24, 2024 and sell it today you would earn a total of  0.00  from holding Tether or generate 0.0% return on investment over 90 days.

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

Tether  vs.  Polygon

Tether

Risk-Adjusted Performance

0 of 100

Very Weak

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

Polygon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Polygon may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Tether and Polygon

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

The idea behind Tether and Polygon 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.