Correlation Between IOTA and ZCash

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

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

Diversification Opportunities for IOTA and ZCash

0.74

Correlation Coefficient

IOTA  ZCash

Poor diversification

The 3 months correlation between IOTA and ZCash is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding IOTA and ZCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZCash and IOTA 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 IOTA 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 IOTA i.e., IOTA and ZCash go up and down completely randomly.

Pair Corralation between IOTA and ZCash

Assuming the 90 days trading horizon IOTA is expected to generate 1.14 times more return on investment than ZCash. However, IOTA is 1.14 times more volatile than ZCash. It trades about 0.22 of its potential returns per unit of risk. ZCash is currently generating about 0.22 per unit of risk. If you would invest  12.00  in IOTA on September 2, 2024 and sell it today you would earn a total of  15.00  from holding IOTA or generate 125.0% return on investment over 90 days.

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

IOTA  vs.  ZCash

IOTA

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IOTA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, IOTA exhibited solid returns over the last few months and may actually be approaching a breakup point.

ZCash

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZCash are ranked lower than 17 (%) 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 IOTA and ZCash

The main advantage of trading using opposite IOTA and ZCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IOTA 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 IOTA 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.