Correlation Between Cosmos and Enjin Coin
Can any of the company-specific risk be diversified away by investing in both Cosmos and Enjin Coin 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 Cosmos and Enjin Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos and Enjin Coin, you can compare the effects of market volatilities on Cosmos and Enjin Coin 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 Cosmos with a short position of Enjin Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and Enjin Coin.
Diversification Opportunities for Cosmos and Enjin Coin
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cosmos and Enjin is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and Enjin Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enjin Coin and Cosmos 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 Cosmos are associated (or correlated) with Enjin Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enjin Coin has no effect on the direction of Cosmos i.e., Cosmos and Enjin Coin go up and down completely randomly.
Pair Corralation between Cosmos and Enjin Coin
Assuming the 90 days trading horizon Cosmos is expected to generate 0.84 times more return on investment than Enjin Coin. However, Cosmos is 1.2 times less risky than Enjin Coin. It trades about -0.27 of its potential returns per unit of risk. Enjin Coin is currently generating about -0.26 per unit of risk. If you would invest 1,142 in Cosmos on January 21, 2024 and sell it today you would lose (324.00) from holding Cosmos or give up 28.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosmos vs. Enjin Coin
Performance |
| Timeline |
| Cosmos |
| Enjin Coin |
Cosmos and Enjin Coin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmos and Enjin Coin
The main advantage of trading using opposite Cosmos and Enjin Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos position performs unexpectedly, Enjin Coin 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 Enjin Coin will offset losses from the drop in Enjin Coin's long position.The idea behind Cosmos and Enjin Coin 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.Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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