Correlation Between Uniswap Protocol and Osmosis

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

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

Diversification Opportunities for Uniswap Protocol and Osmosis

0.44

Correlation Coefficient

Uniswap Protocol  Osmosis

Very weak diversification

The 3 months correlation between Uniswap and Osmosis is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and Osmosis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osmosis and Uniswap Protocol 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 Uniswap Protocol Token are associated (or correlated) with Osmosis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osmosis has no effect on the direction of Uniswap Protocol i.e., Uniswap Protocol and Osmosis go up and down completely randomly.

Pair Corralation between Uniswap Protocol and Osmosis

Assuming the 90 days trading horizon Uniswap Protocol Token is expected to generate 1.15 times more return on investment than Osmosis. However, Uniswap Protocol is 1.15 times more volatile than Osmosis. It trades about 0.21 of its potential returns per unit of risk. Osmosis is currently generating about 0.16 per unit of risk. If you would invest  604.00  in Uniswap Protocol Token on September 1, 2024 and sell it today you would earn a total of  675.00  from holding Uniswap Protocol Token or generate 111.75% return on investment over 90 days.

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

Uniswap Protocol Token  vs.  Osmosis

Uniswap Protocol Token

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Uniswap Protocol exhibited solid returns over the last few months and may actually be approaching a breakup point.

Osmosis

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Osmosis are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Osmosis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Uniswap Protocol and Osmosis

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

The idea behind Uniswap Protocol Token and Osmosis 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.