Correlation Between USD Coin and Optimism

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

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

Diversification Opportunities for USD Coin and Optimism

0.0

Correlation Coefficient

USD Coin  Optimism

Pay attention - limited upside

The 3 months correlation between USD and Optimism is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding USD Coin and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism and USD Coin 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 USD Coin are associated (or correlated) with Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of USD Coin i.e., USD Coin and Optimism go up and down completely randomly.

Pair Corralation between USD Coin and Optimism

If you would invest  100.00  in USD Coin on January 3, 2025 and sell it today you would earn a total of  0.00  from holding USD Coin or generate 0.0% return on investment over 90 days.

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

USD Coin  vs.  Optimism

USD Coin

Risk-Adjusted Performance

Very Weak

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

Optimism

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optimism 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 fundamental indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for Optimism shareholders.

Pair Trading with USD Coin and Optimism

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

The idea behind USD Coin and Optimism 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.