Correlation Between Power Ledger and ABBC
Can any of the company-specific risk be diversified away by investing in both Power Ledger and ABBC 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 Power Ledger and ABBC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Ledger and ABBC, you can compare the effects of market volatilities on Power Ledger and ABBC 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 Power Ledger with a short position of ABBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Ledger and ABBC.
Diversification Opportunities for Power Ledger and ABBC
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Power and ABBC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Power Ledger and ABBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABBC and Power Ledger 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 Power Ledger are associated (or correlated) with ABBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABBC has no effect on the direction of Power Ledger i.e., Power Ledger and ABBC go up and down completely randomly.
Pair Corralation between Power Ledger and ABBC
Assuming the 90 days trading horizon Power Ledger is expected to generate 0.87 times more return on investment than ABBC. However, Power Ledger is 1.15 times less risky than ABBC. It trades about -0.18 of its potential returns per unit of risk. ABBC is currently generating about -0.34 per unit of risk. If you would invest 41.00 in Power Ledger on January 26, 2024 and sell it today you would lose (11.00) from holding Power Ledger or give up 26.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Power Ledger vs. ABBC
Performance |
Timeline |
Power Ledger |
ABBC |
Power Ledger and ABBC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Power Ledger and ABBC
The main advantage of trading using opposite Power Ledger and ABBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Ledger position performs unexpectedly, ABBC 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 ABBC will offset losses from the drop in ABBC's long position.Power Ledger vs. Solana | Power Ledger vs. XRP | Power Ledger vs. Staked Ether | Power Ledger 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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