Correlation Between Basic Attention and Quant
Can any of the company-specific risk be diversified away by investing in both Basic Attention and Quant 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 Quant 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 Quant, you can compare the effects of market volatilities on Basic Attention and Quant 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 Quant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Attention and Quant.
Diversification Opportunities for Basic Attention and Quant
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Basic and Quant is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Basic Attention Token and Quant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quant 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 Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quant has no effect on the direction of Basic Attention i.e., Basic Attention and Quant go up and down completely randomly.
Pair Corralation between Basic Attention and Quant
Assuming the 90 days trading horizon Basic Attention Token is expected to generate 1.09 times more return on investment than Quant. However, Basic Attention is 1.09 times more volatile than Quant. It trades about 0.04 of its potential returns per unit of risk. Quant is currently generating about 0.02 per unit of risk. If you would invest 24.00 in Basic Attention Token on January 26, 2024 and sell it today you would earn a total of 4.00 from holding Basic Attention Token or generate 16.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Basic Attention Token vs. Quant
Performance |
Timeline |
Basic Attention Token |
Quant |
Basic Attention and Quant Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Basic Attention and Quant
The main advantage of trading using opposite Basic Attention and Quant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Attention position performs unexpectedly, Quant 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 Quant will offset losses from the drop in Quant's long position.Basic Attention vs. Solana | Basic Attention vs. XRP | Basic Attention vs. Staked Ether | Basic Attention vs. The Open Network |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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