Correlation Between Sei and Theta Network

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

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

Diversification Opportunities for Sei and Theta Network

0.8

Correlation Coefficient

Sei  Theta Network

Very poor diversification

The 3 months correlation between Sei and Theta is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sei and Theta Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Network and Sei 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 Sei are associated (or correlated) with Theta Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Network has no effect on the direction of Sei i.e., Sei and Theta Network go up and down completely randomly.

Pair Corralation between Sei and Theta Network

Assuming the 90 days trading horizon Sei is expected to generate 1.03 times less return on investment than Theta Network. In addition to that, Sei is 1.1 times more volatile than Theta Network. It trades about 0.25 of its total potential returns per unit of risk. Theta Network is currently generating about 0.28 per unit of volatility. If you would invest  113.00  in Theta Network on September 2, 2024 and sell it today you would earn a total of  196.00  from holding Theta Network or generate 173.45% return on investment over 90 days.

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

Sei  vs.  Theta Network

Sei

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sei are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Sei exhibited solid returns over the last few months and may actually be approaching a breakup point.

Theta Network

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Theta Network are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Theta Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sei and Theta Network

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

The idea behind Sei and Theta Network 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.