Correlation Between True USD and 0x

Can any of the company-specific risk be diversified away by investing in both True USD and 0x 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 True USD and 0x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between True USD and 0x, you can compare the effects of market volatilities on True USD and 0x 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 True USD with a short position of 0x. Check out your portfolio center. Please also check ongoing floating volatility patterns of True USD and 0x.

Diversification Opportunities for True USD and 0x

0.14

Correlation Coefficient

True USD  0x

Average diversification

The 3 months correlation between True and 0x is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding True USD and 0x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 0x and True USD 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 True USD are associated (or correlated) with 0x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 0x has no effect on the direction of True USD i.e., True USD and 0x go up and down completely randomly.

Pair Corralation between True USD and 0x

Assuming the 90 days trading horizon True USD is expected to generate 2144.0 times less return on investment than 0x. But when comparing it to its historical volatility, True USD is 16.55 times less risky than 0x. It trades about 0.0 of its potential returns per unit of risk. 0x is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  28.00  in 0x on September 1, 2024 and sell it today you would earn a total of  30.00  from holding 0x or generate 107.14% return on investment over 90 days.

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

True USD  vs.  0x

True USD

Risk-Adjusted Performance

0 of 100

Very Weak

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

0x

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 0x are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, 0x exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with True USD and 0x

The main advantage of trading using opposite True USD and 0x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True USD position performs unexpectedly, 0x 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 0x will offset losses from the drop in 0x's long position.

The idea behind True USD and 0x 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.