Correlation Between Ethereum Name and Arweave
Can any of the company-specific risk be diversified away by investing in both Ethereum Name and Arweave 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 Ethereum Name and Arweave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum Name Service and Arweave, you can compare the effects of market volatilities on Ethereum Name and Arweave 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 Ethereum Name with a short position of Arweave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum Name and Arweave.
Diversification Opportunities for Ethereum Name and Arweave
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ethereum and Arweave is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum Name Service and Arweave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arweave and Ethereum Name 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 Ethereum Name Service are associated (or correlated) with Arweave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arweave has no effect on the direction of Ethereum Name i.e., Ethereum Name and Arweave go up and down completely randomly.
Pair Corralation between Ethereum Name and Arweave
Assuming the 90 days trading horizon Ethereum Name Service is expected to generate 1.45 times more return on investment than Arweave. However, Ethereum Name is 1.45 times more volatile than Arweave. It trades about 0.2 of its potential returns per unit of risk. Arweave is currently generating about 0.09 per unit of risk. If you would invest 1,662 in Ethereum Name Service on September 2, 2024 and sell it today you would earn a total of 2,373 from holding Ethereum Name Service or generate 142.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethereum Name Service vs. Arweave
Performance |
| Timeline |
| Ethereum Name Service |
| Arweave |
Ethereum Name and Arweave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum Name and Arweave
The main advantage of trading using opposite Ethereum Name and Arweave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum Name position performs unexpectedly, Arweave 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 Arweave will offset losses from the drop in Arweave's long position.| Ethereum Name vs. Ethereum Classic | Ethereum Name vs. Ethereum PoW | Ethereum Name vs. Staked Ether | Ethereum Name vs. EigenLayer |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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