Correlation Between Cosmos and Waves
Can any of the company-specific risk be diversified away by investing in both Cosmos and Waves 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 Waves into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos and Waves, you can compare the effects of market volatilities on Cosmos and Waves 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 Waves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and Waves.
Diversification Opportunities for Cosmos and Waves
Very poor diversification
The 3 months correlation between Cosmos and Waves is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and Waves in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waves 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 Waves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waves has no effect on the direction of Cosmos i.e., Cosmos and Waves go up and down completely randomly.
Pair Corralation between Cosmos and Waves
Assuming the 90 days trading horizon Cosmos is expected to generate 0.9 times more return on investment than Waves. However, Cosmos is 1.11 times less risky than Waves. It trades about -0.28 of its potential returns per unit of risk. Waves is currently generating about -0.36 per unit of risk. If you would invest 1,221 in Cosmos on January 25, 2024 and sell it today you would lose (350.00) from holding Cosmos or give up 28.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cosmos vs. Waves
Performance |
| Timeline |
| Cosmos |
| Waves |
Cosmos and Waves Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmos and Waves
The main advantage of trading using opposite Cosmos and Waves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos position performs unexpectedly, Waves 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 Waves will offset losses from the drop in Waves' long position.The idea behind Cosmos and Waves 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |