Correlation Between FTX Token and Litecoin
Can any of the company-specific risk be diversified away by investing in both FTX Token and Litecoin 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 FTX Token and Litecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTX Token and Litecoin, you can compare the effects of market volatilities on FTX Token and Litecoin 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 FTX Token with a short position of Litecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTX Token and Litecoin.
Diversification Opportunities for FTX Token and Litecoin
Good diversification
The 3 months correlation between FTX and Litecoin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and Litecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litecoin and FTX Token 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 FTX Token are associated (or correlated) with Litecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litecoin has no effect on the direction of FTX Token i.e., FTX Token and Litecoin go up and down completely randomly.
Pair Corralation between FTX Token and Litecoin
Assuming the 90 days trading horizon FTX Token is expected to generate 2.66 times more return on investment than Litecoin. However, FTX Token is 2.66 times more volatile than Litecoin. It trades about 0.01 of its potential returns per unit of risk. Litecoin is currently generating about 0.02 per unit of risk. If you would invest 3,622 in FTX Token on January 24, 2024 and sell it today you would lose (3,467) from holding FTX Token or give up 95.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.81% |
| Values | Daily Returns |
FTX Token vs. Litecoin
Performance |
| Timeline |
| FTX Token |
| Litecoin |
FTX Token and Litecoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTX Token and Litecoin
The main advantage of trading using opposite FTX Token and Litecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTX Token position performs unexpectedly, Litecoin 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 Litecoin will offset losses from the drop in Litecoin's long position.The idea behind FTX Token and Litecoin 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |