Correlation Between Ethereum Classic and Dogecoin
Can any of the company-specific risk be diversified away by investing in both Ethereum Classic and Dogecoin 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 Classic and Dogecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum Classic and Dogecoin, you can compare the effects of market volatilities on Ethereum Classic and Dogecoin 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 Classic with a short position of Dogecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum Classic and Dogecoin.
Diversification Opportunities for Ethereum Classic and Dogecoin
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ethereum and Dogecoin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum Classic and Dogecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogecoin and Ethereum Classic 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 Classic are associated (or correlated) with Dogecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogecoin has no effect on the direction of Ethereum Classic i.e., Ethereum Classic and Dogecoin go up and down completely randomly.
Pair Corralation between Ethereum Classic and Dogecoin
Assuming the 90 days trading horizon Ethereum Classic is expected to generate 4.81 times less return on investment than Dogecoin. But when comparing it to its historical volatility, Ethereum Classic is 2.78 times less risky than Dogecoin. It trades about 0.13 of its potential returns per unit of risk. Dogecoin is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Dogecoin on August 23, 2024 and sell it today you would earn a total of 28.00 from holding Dogecoin or generate 254.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethereum Classic vs. Dogecoin
Performance |
| Timeline |
| Ethereum Classic |
| Dogecoin |
Ethereum Classic and Dogecoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum Classic and Dogecoin
The main advantage of trading using opposite Ethereum Classic and Dogecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum Classic position performs unexpectedly, Dogecoin 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 Dogecoin will offset losses from the drop in Dogecoin's long position.| Ethereum Classic vs. Ethereum PoW | Ethereum Classic vs. Ethereum Name Service | Ethereum Classic vs. Staked Ether | Ethereum Classic 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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