Correlation Between LEO Token and Power Ledger
Can any of the company-specific risk be diversified away by investing in both LEO Token and Power Ledger 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 LEO Token and Power Ledger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEO Token and Power Ledger, you can compare the effects of market volatilities on LEO Token and Power Ledger 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 LEO Token with a short position of Power Ledger. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEO Token and Power Ledger.
Diversification Opportunities for LEO Token and Power Ledger
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LEO and Power is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding LEO Token and Power Ledger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Ledger and LEO 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 LEO Token are associated (or correlated) with Power Ledger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Ledger has no effect on the direction of LEO Token i.e., LEO Token and Power Ledger go up and down completely randomly.
Pair Corralation between LEO Token and Power Ledger
Assuming the 90 days trading horizon LEO Token is expected to generate 2.32 times less return on investment than Power Ledger. But when comparing it to its historical volatility, LEO Token is 4.31 times less risky than Power Ledger. It trades about 0.14 of its potential returns per unit of risk. Power Ledger is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Power Ledger on January 24, 2024 and sell it today you would earn a total of 7.00 from holding Power Ledger or generate 29.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEO Token vs. Power Ledger
Performance |
| Timeline |
| LEO Token |
| Power Ledger |
LEO Token and Power Ledger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEO Token and Power Ledger
The main advantage of trading using opposite LEO Token and Power Ledger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEO Token position performs unexpectedly, Power Ledger 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 Power Ledger will offset losses from the drop in Power Ledger's long position.The idea behind LEO Token and Power Ledger 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.| Power Ledger vs. Solana | Power Ledger vs. XRP | Power Ledger vs. The Open Network | Power Ledger 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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