Correlation Between Power Ledger and CENNZ
Can any of the company-specific risk be diversified away by investing in both Power Ledger and CENNZ 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 CENNZ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Ledger and CENNZ, you can compare the effects of market volatilities on Power Ledger and CENNZ 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 CENNZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Ledger and CENNZ.
Diversification Opportunities for Power Ledger and CENNZ
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Power and CENNZ is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Power Ledger and CENNZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENNZ 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 CENNZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENNZ has no effect on the direction of Power Ledger i.e., Power Ledger and CENNZ go up and down completely randomly.
Pair Corralation between Power Ledger and CENNZ
Assuming the 90 days trading horizon Power Ledger is expected to generate 24.69 times less return on investment than CENNZ. But when comparing it to its historical volatility, Power Ledger is 8.23 times less risky than CENNZ. It trades about 0.03 of its potential returns per unit of risk. CENNZ is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 10.00 in CENNZ on December 30, 2023 and sell it today you would lose (0.78) from holding CENNZ or give up 7.8% 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. CENNZ
Performance |
Timeline |
Power Ledger |
CENNZ |
Power Ledger and CENNZ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Power Ledger and CENNZ
The main advantage of trading using opposite Power Ledger and CENNZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Ledger position performs unexpectedly, CENNZ 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 CENNZ will offset losses from the drop in CENNZ'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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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