Correlation Between BFT and Staked Ether
Can any of the company-specific risk be diversified away by investing in both BFT and Staked Ether 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 BFT and Staked Ether into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BFT and Staked Ether, you can compare the effects of market volatilities on BFT and Staked Ether 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 BFT with a short position of Staked Ether. Check out your portfolio center. Please also check ongoing floating volatility patterns of BFT and Staked Ether.
Diversification Opportunities for BFT and Staked Ether
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BFT and Staked is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BFT and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether and BFT 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 BFT are associated (or correlated) with Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of BFT i.e., BFT and Staked Ether go up and down completely randomly.
Pair Corralation between BFT and Staked Ether
Assuming the 90 days trading horizon BFT is expected to generate 1.64 times less return on investment than Staked Ether. In addition to that, BFT is 1.89 times more volatile than Staked Ether. It trades about 0.1 of its total potential returns per unit of risk. Staked Ether is currently generating about 0.31 per unit of volatility. If you would invest 253,302 in Staked Ether on August 24, 2024 and sell it today you would earn a total of 83,153 from holding Staked Ether or generate 32.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BFT vs. Staked Ether
Performance |
| Timeline |
| BFT |
| Staked Ether |
BFT and Staked Ether Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BFT and Staked Ether
The main advantage of trading using opposite BFT and Staked Ether positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BFT position performs unexpectedly, Staked Ether 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 Staked Ether will offset losses from the drop in Staked Ether's long position.The idea behind BFT and Staked Ether 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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