Correlation Between Ethereum Name and Litecoin
Can any of the company-specific risk be diversified away by investing in both Ethereum Name and Litecoin 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 Litecoin 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 Litecoin, you can compare the effects of market volatilities on Ethereum Name and Litecoin 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 Litecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum Name and Litecoin.
Diversification Opportunities for Ethereum Name and Litecoin
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ethereum and Litecoin is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum Name Service and Litecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litecoin 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 Litecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litecoin has no effect on the direction of Ethereum Name i.e., Ethereum Name and Litecoin go up and down completely randomly.
Pair Corralation between Ethereum Name and Litecoin
Assuming the 90 days trading horizon Ethereum Name Service is expected to generate 1.98 times more return on investment than Litecoin. However, Ethereum Name is 1.98 times more volatile than Litecoin. It trades about 0.2 of its potential returns per unit of risk. Litecoin is currently generating about 0.19 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethereum Name Service vs. Litecoin
Performance |
| Timeline |
| Ethereum Name Service |
| Litecoin |
Ethereum Name and Litecoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum Name and Litecoin
The main advantage of trading using opposite Ethereum Name and Litecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum Name position performs unexpectedly, Litecoin 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 Litecoin will offset losses from the drop in Litecoin'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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