Correlation Between Quant and 0x
Can any of the company-specific risk be diversified away by investing in both Quant and 0x 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 Quant and 0x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quant and 0x, you can compare the effects of market volatilities on Quant and 0x 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 Quant with a short position of 0x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quant and 0x.
Diversification Opportunities for Quant and 0x
Very weak diversification
The 3 months correlation between Quant and 0x is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Quant and 0x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 0x and Quant 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 Quant are associated (or correlated) with 0x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 0x has no effect on the direction of Quant i.e., Quant and 0x go up and down completely randomly.
Pair Corralation between Quant and 0x
Assuming the 90 days trading horizon Quant is expected to generate 2.31 times less return on investment than 0x. But when comparing it to its historical volatility, Quant is 1.59 times less risky than 0x. It trades about 0.03 of its potential returns per unit of risk. 0x is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 71.00 in 0x on December 30, 2023 and sell it today you would earn a total of 34.00 from holding 0x or generate 47.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Quant vs. 0x
Performance |
Timeline |
Quant |
0x |
Quant and 0x Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Quant and 0x
The main advantage of trading using opposite Quant and 0x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quant position performs unexpectedly, 0x 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 0x will offset losses from the drop in 0x's long position.The idea behind Quant and 0x 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Transaction History View history of all your transactions and understand their impact on performance | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
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 | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |