Correlation Between Sushi and Synthetix

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

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

Diversification Opportunities for Sushi and Synthetix

0.94

Correlation Coefficient

Sushi  Synthetix

Almost no diversification

The 3 months correlation between Sushi and Synthetix is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sushi and Synthetix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthetix and Sushi 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 Sushi are associated (or correlated) with Synthetix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthetix has no effect on the direction of Sushi i.e., Sushi and Synthetix go up and down completely randomly.

Pair Corralation between Sushi and Synthetix

Assuming the 90 days trading horizon Sushi is expected to generate 1.31 times more return on investment than Synthetix. However, Sushi is 1.31 times more volatile than Synthetix. It trades about 0.22 of its potential returns per unit of risk. Synthetix is currently generating about 0.22 per unit of risk. If you would invest  60.00  in Sushi on September 3, 2024 and sell it today you would earn a total of  74.00  from holding Sushi or generate 123.33% return on investment over 90 days.

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

Sushi  vs.  Synthetix

Sushi

Risk-Adjusted Performance

17 of 100

Solid

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

Synthetix

Risk-Adjusted Performance

17 of 100

Solid

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

Pair Trading with Sushi and Synthetix

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

The idea behind Sushi and Synthetix 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .