Correlation Between Nano and Decred
Can any of the company-specific risk be diversified away by investing in both Nano and Decred 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 Nano and Decred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nano and Decred, you can compare the effects of market volatilities on Nano and Decred 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 Nano with a short position of Decred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano and Decred.
Diversification Opportunities for Nano and Decred
Almost no diversification
The 3 months correlation between Nano and Decred is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nano and Decred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decred and Nano 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 Nano are associated (or correlated) with Decred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decred has no effect on the direction of Nano i.e., Nano and Decred go up and down completely randomly.
Pair Corralation between Nano and Decred
Assuming the 90 days trading horizon Nano is expected to generate 1.04 times less return on investment than Decred. But when comparing it to its historical volatility, Nano is 1.05 times less risky than Decred. It trades about 0.21 of its potential returns per unit of risk. Decred is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,119 in Decred on December 29, 2023 and sell it today you would earn a total of 599.00 from holding Decred or generate 28.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Nano vs. Decred
Performance |
Timeline |
Nano |
Decred |
Nano and Decred Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nano and Decred
The main advantage of trading using opposite Nano and Decred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano position performs unexpectedly, Decred 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 Decred will offset losses from the drop in Decred's long position.The idea behind Nano and Decred 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
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 | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |