Correlation Between Arweave and ZCash

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

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

Diversification Opportunities for Arweave and ZCash

-0.31

Correlation Coefficient

Arweave  ZCash

Very good diversification

The 3 months correlation between Arweave and ZCash is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Arweave and ZCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCash and Arweave 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 Arweave are associated (or correlated) with ZCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZCash has no effect on the direction of Arweave i.e., Arweave and ZCash go up and down completely randomly.

Pair Corralation between Arweave and ZCash

Assuming the 90 days horizon Arweave is expected to generate 6.73 times less return on investment than ZCash. But when comparing it to its historical volatility, Arweave is 1.04 times less risky than ZCash. It trades about 0.03 of its potential returns per unit of risk. ZCash is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,216  in ZCash on August 30, 2024 and sell it today you would earn a total of  2,375  from holding ZCash or generate 73.85% return on investment over 90 days.

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

Arweave  vs.  ZCash

Arweave

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arweave are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Arweave may actually be approaching a critical reversion point that can send shares even higher in December 2024.

ZCash

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZCash are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ZCash exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arweave and ZCash

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

The idea behind Arweave and ZCash 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.