Correlation Between CLO and Uquid Coin

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

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

Diversification Opportunities for CLO and Uquid Coin

0.64

Correlation Coefficient

CLO  Uquid Coin

Poor diversification

The 3 months correlation between CLO and Uquid is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CLO and Uquid Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uquid Coin and CLO 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 CLO are associated (or correlated) with Uquid Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uquid Coin has no effect on the direction of CLO i.e., CLO and Uquid Coin go up and down completely randomly.

Pair Corralation between CLO and Uquid Coin

Assuming the 90 days trading horizon CLO is expected to generate 1.18 times less return on investment than Uquid Coin. But when comparing it to its historical volatility, CLO is 1.13 times less risky than Uquid Coin. It trades about 0.04 of its potential returns per unit of risk. Uquid Coin is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  840.00  in Uquid Coin on February 5, 2024 and sell it today you would lose (223.00) from holding Uquid Coin or give up 26.55% of portfolio value over 90 days.

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

CLO  vs.  Uquid Coin

CLO

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CLO are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CLO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Uquid Coin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uquid Coin 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 June 2024. The latest tumult may also be a sign of longer-term up-swing for Uquid Coin shareholders.

Pair Trading with CLO and Uquid Coin

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

The idea behind CLO and Uquid Coin 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.