Correlation Between ULT and Monero
Can any of the company-specific risk be diversified away by investing in both ULT and Monero 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 ULT and Monero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ULT and Monero, you can compare the effects of market volatilities on ULT and Monero 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 ULT with a short position of Monero. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULT and Monero.
Diversification Opportunities for ULT and Monero
Very weak diversification
The 3 months correlation between ULT and Monero is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ULT and Monero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monero and ULT 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 ULT are associated (or correlated) with Monero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monero has no effect on the direction of ULT i.e., ULT and Monero go up and down completely randomly.
Pair Corralation between ULT and Monero
Assuming the 90 days trading horizon ULT is expected to under-perform the Monero. But the crypto coin apears to be less risky and, when comparing its historical volatility, ULT is 1.2 times less risky than Monero. The crypto coin trades about -0.01 of its potential returns per unit of risk. The Monero is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 23,246 in Monero on December 30, 2023 and sell it today you would lose (9,741) from holding Monero or give up 41.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 74.46% |
Values | Daily Returns |
ULT vs. Monero
Performance |
Timeline |
ULT |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Monero |
ULT and Monero Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ULT and Monero
The main advantage of trading using opposite ULT and Monero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULT position performs unexpectedly, Monero 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 Monero will offset losses from the drop in Monero's long position.The idea behind ULT and Monero 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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