Correlation Between 0x and Maker
Can any of the company-specific risk be diversified away by investing in both 0x and Maker 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 0x and Maker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 0x and Maker, you can compare the effects of market volatilities on 0x and Maker 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 0x with a short position of Maker. Check out your portfolio center. Please also check ongoing floating volatility patterns of 0x and Maker.
Diversification Opportunities for 0x and Maker
Poor diversification
The 3 months correlation between 0x and Maker is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding 0x and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker and 0x 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 0x are associated (or correlated) with Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of 0x i.e., 0x and Maker go up and down completely randomly.
Pair Corralation between 0x and Maker
Assuming the 90 days trading horizon 0x is expected to under-perform the Maker. In addition to that, 0x is 1.41 times more volatile than Maker. It trades about -0.24 of its total potential returns per unit of risk. Maker is currently generating about -0.06 per unit of volatility. If you would invest 337,806 in Maker on January 20, 2024 and sell it today you would lose (37,705) from holding Maker or give up 11.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
0x vs. Maker
Performance |
| Timeline |
| 0x |
| Maker |
0x and Maker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 0x and Maker
The main advantage of trading using opposite 0x and Maker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 0x position performs unexpectedly, Maker 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 Maker will offset losses from the drop in Maker's long position.The idea behind 0x and Maker 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.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |