Correlation Between FTX Token and Polygon

Can any of the company-specific risk be diversified away by investing in both FTX Token and Polygon 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 FTX Token and Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FTX Token and Polygon, you can compare the effects of market volatilities on FTX Token and Polygon 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 FTX Token with a short position of Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTX Token and Polygon.

Diversification Opportunities for FTX Token and Polygon

0.91

Correlation Coefficient

FTX Token  Polygon

Almost no diversification

The 3 months correlation between FTX and Polygon is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding FTX Token and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon and FTX Token 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 FTX Token are associated (or correlated) with Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of FTX Token i.e., FTX Token and Polygon go up and down completely randomly.

Pair Corralation between FTX Token and Polygon

Assuming the 90 days trading horizon FTX Token is expected to generate 1.39 times more return on investment than Polygon. However, FTX Token is 1.39 times more volatile than Polygon. It trades about -0.01 of its potential returns per unit of risk. Polygon is currently generating about -0.1 per unit of risk. If you would invest  167.00  in FTX Token on February 4, 2024 and sell it today you would lose (15.00) from holding FTX Token or give up 8.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

FTX Token  vs.  Polygon

FTX Token

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FTX Token are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, FTX Token may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Polygon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polygon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Polygon is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FTX Token and Polygon

The main advantage of trading using opposite FTX Token and Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTX Token position performs unexpectedly, Polygon 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 Polygon will offset losses from the drop in Polygon's long position.

The idea behind FTX Token and Polygon 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.