Correlation Between Tether and Optimism

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

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

Diversification Opportunities for Tether and Optimism

0.0

Correlation Coefficient

Tether  Optimism

Pay attention - limited upside

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

Pair Corralation between Tether and Optimism

If you would invest  142.00  in Optimism on August 30, 2024 and sell it today you would earn a total of  109.00  from holding Optimism or generate 76.76% return on investment over 90 days.

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

Tether  vs.  Optimism

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.

Optimism

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optimism are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Optimism exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tether and Optimism

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

The idea behind Tether and Optimism 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.