Correlation Between Basic Attention and LEO Token
Can any of the company-specific risk be diversified away by investing in both Basic Attention and LEO Token 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 Basic Attention and LEO Token into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Attention Token and LEO Token, you can compare the effects of market volatilities on Basic Attention and LEO Token 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 Basic Attention with a short position of LEO Token. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Attention and LEO Token.
Diversification Opportunities for Basic Attention and LEO Token
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Basic and LEO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Basic Attention Token and LEO Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEO Token and Basic Attention 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 Basic Attention Token are associated (or correlated) with LEO Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEO Token has no effect on the direction of Basic Attention i.e., Basic Attention and LEO Token go up and down completely randomly.
Pair Corralation between Basic Attention and LEO Token
Assuming the 90 days trading horizon Basic Attention Token is expected to under-perform the LEO Token. In addition to that, Basic Attention is 3.53 times more volatile than LEO Token. It trades about -0.11 of its total potential returns per unit of risk. LEO Token is currently generating about -0.09 per unit of volatility. If you would invest 612.00 in LEO Token on January 20, 2024 and sell it today you would lose (27.00) from holding LEO Token or give up 4.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.65% |
Values | Daily Returns |
Basic Attention Token vs. LEO Token
Performance |
Timeline |
Basic Attention Token |
LEO Token |
Basic Attention and LEO Token Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Basic Attention and LEO Token
The main advantage of trading using opposite Basic Attention and LEO Token positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Attention position performs unexpectedly, LEO Token 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 LEO Token will offset losses from the drop in LEO Token's long position.Basic Attention vs. Solana | Basic Attention vs. XRP | Basic Attention vs. The Open Network | Basic Attention vs. Staked Ether |
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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