Correlation Between Tether and Band Protocol

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

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

Diversification Opportunities for Tether and Band Protocol

0.0

Correlation Coefficient

Tether  Band Protocol

Pay attention - limited upside

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

Pair Corralation between Tether and Band Protocol

If you would invest  106.00  in Band Protocol on August 30, 2024 and sell it today you would earn a total of  60.00  from holding Band Protocol or generate 56.6% return on investment over 90 days.

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

Tether  vs.  Band Protocol

Tether

Risk-Adjusted Performance

0 of 100

Very Weak

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

Band Protocol

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Tether and Band Protocol

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

The idea behind Tether and Band Protocol 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.