Correlation Between USD Coin and UMA

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

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

Diversification Opportunities for USD Coin and UMA

0.0

Correlation Coefficient

USD Coin  UMA

Pay attention - limited upside

The 3 months correlation between USD and UMA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding USD Coin and UMA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMA and USD Coin 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 USD Coin are associated (or correlated) with UMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMA has no effect on the direction of USD Coin i.e., USD Coin and UMA go up and down completely randomly.

Pair Corralation between USD Coin and UMA

If you would invest  223.00  in UMA on September 1, 2024 and sell it today you would earn a total of  101.00  from holding UMA or generate 45.29% return on investment over 90 days.

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

USD Coin  vs.  UMA

USD Coin

Risk-Adjusted Performance

0 of 100

Very Weak

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

UMA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UMA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UMA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with USD Coin and UMA

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

The idea behind USD Coin and UMA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.