Correlation Between LayerZero and CVNT

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

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

Diversification Opportunities for LayerZero and CVNT

-0.34

Correlation Coefficient

LayerZero  CVNT

Very good diversification

The 3 months correlation between LayerZero and CVNT is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding LayerZero and CVNT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVNT and LayerZero 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 LayerZero are associated (or correlated) with CVNT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVNT has no effect on the direction of LayerZero i.e., LayerZero and CVNT go up and down completely randomly.

Pair Corralation between LayerZero and CVNT

Assuming the 90 days trading horizon LayerZero is expected to under-perform the CVNT. In addition to that, LayerZero is 2.12 times more volatile than CVNT. It trades about -0.03 of its total potential returns per unit of risk. CVNT is currently generating about 0.18 per unit of volatility. If you would invest  19.00  in CVNT on April 21, 2025 and sell it today you would earn a total of  6.00  from holding CVNT or generate 31.58% return on investment over 90 days.

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

LayerZero  vs.  CVNT

LayerZero

Risk-Adjusted Performance

Very Weak

Over the last 90 days LayerZero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for LayerZero shareholders.

CVNT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CVNT are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, CVNT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LayerZero and CVNT

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

The idea behind LayerZero and CVNT 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.