Correlation Between Power Ledger and Lisk
Can any of the company-specific risk be diversified away by investing in both Power Ledger and Lisk 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 Lisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Ledger and Lisk, you can compare the effects of market volatilities on Power Ledger and Lisk 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 Lisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Ledger and Lisk.
Diversification Opportunities for Power Ledger and Lisk
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Power and Lisk is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Power Ledger and Lisk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lisk 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 Lisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lisk has no effect on the direction of Power Ledger i.e., Power Ledger and Lisk go up and down completely randomly.
Pair Corralation between Power Ledger and Lisk
Assuming the 90 days trading horizon Power Ledger is expected to under-perform the Lisk. But the crypto coin apears to be less risky and, when comparing its historical volatility, Power Ledger is 1.22 times less risky than Lisk. The crypto coin trades about -0.19 of its potential returns per unit of risk. The Lisk is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Lisk on January 26, 2024 and sell it today you would lose (33.00) from holding Lisk or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Ledger vs. Lisk
Performance |
| Timeline |
| Power Ledger |
| Lisk |
Power Ledger and Lisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Ledger and Lisk
The main advantage of trading using opposite Power Ledger and Lisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Ledger position performs unexpectedly, Lisk 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 Lisk will offset losses from the drop in Lisk'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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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