Correlation Between Yearnfinance and NPXS

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

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

Diversification Opportunities for Yearnfinance and NPXS

-0.35

Correlation Coefficient

Yearnfinance  NPXS

Very good diversification

The 3 months correlation between Yearnfinance and NPXS is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding yearnfinance and NPXS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NPXS and Yearnfinance 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 yearnfinance are associated (or correlated) with NPXS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NPXS has no effect on the direction of Yearnfinance i.e., Yearnfinance and NPXS go up and down completely randomly.

Pair Corralation between Yearnfinance and NPXS

Assuming the 90 days trading horizon yearnfinance is expected to generate 0.54 times more return on investment than NPXS. However, yearnfinance is 1.85 times less risky than NPXS. It trades about 0.21 of its potential returns per unit of risk. NPXS is currently generating about -0.13 per unit of risk. If you would invest  494,624  in yearnfinance on September 3, 2024 and sell it today you would earn a total of  311,564  from holding yearnfinance or generate 62.99% return on investment over 90 days.

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

yearnfinance  vs.  NPXS

yearnfinance

Risk-Adjusted Performance

16 of 100

Solid

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

NPXS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NPXS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for NPXS shareholders.

Pair Trading with Yearnfinance and NPXS

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

The idea behind yearnfinance and NPXS 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.