Correlation Between Polygon Ecosystem and CMT

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

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

Diversification Opportunities for Polygon Ecosystem and CMT

-0.05

Correlation Coefficient

Polygon Ecosystem  CMT

Good diversification

The 3 months correlation between Polygon and CMT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Polygon Ecosystem Token and CMT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMT and Polygon Ecosystem 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 Polygon Ecosystem Token are associated (or correlated) with CMT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMT has no effect on the direction of Polygon Ecosystem i.e., Polygon Ecosystem and CMT go up and down completely randomly.

Pair Corralation between Polygon Ecosystem and CMT

Assuming the 90 days trading horizon Polygon Ecosystem Token is expected to under-perform the CMT. In addition to that, Polygon Ecosystem is 1.47 times more volatile than CMT. It trades about -0.06 of its total potential returns per unit of risk. CMT is currently generating about 0.19 per unit of volatility. If you would invest  0.51  in CMT on August 23, 2024 and sell it today you would earn a total of  0.23  from holding CMT or generate 45.15% return on investment over 90 days.

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

Polygon Ecosystem Token  vs.  CMT

Polygon Ecosystem Token

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Crypto's essential indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for Polygon Ecosystem Token shareholders.

CMT

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CMT are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CMT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polygon Ecosystem and CMT

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

The idea behind Polygon Ecosystem Token and CMT 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.