Correlation Between Polygon and Ethereum Classic
Can any of the company-specific risk be diversified away by investing in both Polygon and Ethereum Classic 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 Polygon and Ethereum Classic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygon and Ethereum Classic, you can compare the effects of market volatilities on Polygon and Ethereum Classic 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 Polygon with a short position of Ethereum Classic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygon and Ethereum Classic.
Diversification Opportunities for Polygon and Ethereum Classic
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polygon and Ethereum is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and Ethereum Classic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum Classic and Polygon 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 Polygon are associated (or correlated) with Ethereum Classic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum Classic has no effect on the direction of Polygon i.e., Polygon and Ethereum Classic go up and down completely randomly.
Pair Corralation between Polygon and Ethereum Classic
Assuming the 90 days trading horizon Polygon is expected to under-perform the Ethereum Classic. In addition to that, Polygon is 1.04 times more volatile than Ethereum Classic. It trades about -0.27 of its total potential returns per unit of risk. Ethereum Classic is currently generating about -0.09 per unit of volatility. If you would invest 3,213 in Ethereum Classic on January 25, 2024 and sell it today you would lose (403.00) from holding Ethereum Classic or give up 12.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polygon vs. Ethereum Classic
Performance |
| Timeline |
| Polygon |
| Ethereum Classic |
Polygon and Ethereum Classic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polygon and Ethereum Classic
The main advantage of trading using opposite Polygon and Ethereum Classic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon position performs unexpectedly, Ethereum Classic 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 Ethereum Classic will offset losses from the drop in Ethereum Classic's long position.The idea behind Polygon and Ethereum Classic 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.| Ethereum Classic vs. Bitcoin | Ethereum Classic vs. Dogecoin | Ethereum Classic vs. Bitcoin Cash | Ethereum Classic vs. Litecoin |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |