Correlation Between ZCash and Maker

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

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

Diversification Opportunities for ZCash and Maker

0.22

Correlation Coefficient

ZCash  Maker

Modest diversification

The 3 months correlation between ZCash and Maker is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ZCash and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker and ZCash 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 ZCash are associated (or correlated) with Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of ZCash i.e., ZCash and Maker go up and down completely randomly.

Pair Corralation between ZCash and Maker

Assuming the 90 days trading horizon ZCash is expected to generate 1.16 times more return on investment than Maker. However, ZCash is 1.16 times more volatile than Maker. It trades about 0.22 of its potential returns per unit of risk. Maker is currently generating about 0.05 per unit of risk. If you would invest  2,874  in ZCash on September 2, 2024 and sell it today you would earn a total of  3,057  from holding ZCash or generate 106.37% return on investment over 90 days.

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

ZCash  vs.  Maker

ZCash

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZCash are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ZCash exhibited solid returns over the last few months and may actually be approaching a breakup point.

Maker

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maker are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Maker exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ZCash and Maker

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

The idea behind ZCash and Maker 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.