Correlation Between TRON and BAND
Can any of the company-specific risk be diversified away by investing in both TRON and BAND 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 TRON and BAND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and BAND, you can compare the effects of market volatilities on TRON and BAND 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 TRON with a short position of BAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and BAND.
Diversification Opportunities for TRON and BAND
Poor diversification
The 3 months correlation between TRON and BAND is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TRON and BAND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAND and TRON 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 TRON are associated (or correlated) with BAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAND has no effect on the direction of TRON i.e., TRON and BAND go up and down completely randomly.
Pair Corralation between TRON and BAND
Assuming the 90 days trading horizon TRON is expected to generate 1.01 times less return on investment than BAND. But when comparing it to its historical volatility, TRON is 3.62 times less risky than BAND. It trades about 0.12 of its potential returns per unit of risk. BAND is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 73.00 in BAND on June 7, 2025 and sell it today you would lose (1.00) from holding BAND or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRON vs. BAND
Performance |
| Timeline |
| TRON |
| BAND |
TRON and BAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and BAND
The main advantage of trading using opposite TRON and BAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, BAND 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 will offset losses from the drop in BAND's long position.The idea behind TRON and BAND 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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