Correlation Between Ethena and Telcoin
Can any of the company-specific risk be diversified away by investing in both Ethena and Telcoin 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 Ethena and Telcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethena and Telcoin, you can compare the effects of market volatilities on Ethena and Telcoin 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 Ethena with a short position of Telcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethena and Telcoin.
Diversification Opportunities for Ethena and Telcoin
Excellent diversification
The 3 months correlation between Ethena and Telcoin is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ethena and Telcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telcoin and Ethena 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 Ethena are associated (or correlated) with Telcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telcoin has no effect on the direction of Ethena i.e., Ethena and Telcoin go up and down completely randomly.
Pair Corralation between Ethena and Telcoin
Assuming the 90 days trading horizon Ethena is expected to under-perform the Telcoin. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ethena is 1.25 times less risky than Telcoin. The crypto coin trades about -0.23 of its potential returns per unit of risk. The Telcoin is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 0.59 in Telcoin on November 28, 2024 and sell it today you would earn a total of 0.28 from holding Telcoin or generate 46.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethena vs. Telcoin
Performance |
| Timeline |
| Ethena |
| Telcoin |
Ethena and Telcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethena and Telcoin
The main advantage of trading using opposite Ethena and Telcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethena position performs unexpectedly, Telcoin 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 Telcoin will offset losses from the drop in Telcoin's long position.The idea behind Ethena and Telcoin 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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