Correlation Between CMT and Polygon Ecosystem

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

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

Diversification Opportunities for CMT and Polygon Ecosystem

0.69

Correlation Coefficient

CMT  Polygon Ecosystem

Poor diversification

The 3 months correlation between CMT and Polygon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CMT and Polygon Ecosystem Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon Ecosystem Token and CMT 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 CMT are associated (or correlated) with Polygon Ecosystem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon Ecosystem Token has no effect on the direction of CMT i.e., CMT and Polygon Ecosystem go up and down completely randomly.

Pair Corralation between CMT and Polygon Ecosystem

Assuming the 90 days trading horizon CMT is expected to generate 0.53 times more return on investment than Polygon Ecosystem. However, CMT is 1.87 times less risky than Polygon Ecosystem. It trades about 0.05 of its potential returns per unit of risk. Polygon Ecosystem Token is currently generating about -0.01 per unit of risk. If you would invest  0.77  in CMT on February 10, 2025 and sell it today you would earn a total of  0.06  from holding CMT or generate 7.24% return on investment over 90 days.

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

CMT  vs.  Polygon Ecosystem Token

CMT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CMT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CMT may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Polygon Ecosystem Token

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CMT and Polygon Ecosystem

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

The idea behind CMT and Polygon Ecosystem Token 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 Transaction History module to view history of all your transactions and understand their impact on performance.