Correlation Between Ethereum and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both Ethereum and Leaders Technology 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 and Leaders Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Leaders Technology Investment, you can compare the effects of market volatilities on Ethereum and Leaders Technology 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 with a short position of Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Leaders Technology.
Diversification Opportunities for Ethereum and Leaders Technology
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ethereum and Leaders is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology and Ethereum 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 are associated (or correlated) with Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of Ethereum i.e., Ethereum and Leaders Technology go up and down completely randomly.
Pair Corralation between Ethereum and Leaders Technology
Assuming the 90 days trading horizon Ethereum is expected to generate 1.1 times more return on investment than Leaders Technology. However, Ethereum is 1.1 times more volatile than Leaders Technology Investment. It trades about -0.01 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about -0.1 per unit of risk. If you would invest 339,786 in Ethereum on October 28, 2024 and sell it today you would lose (7,941) from holding Ethereum or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ethereum vs. Leaders Technology Investment
Performance |
| Timeline |
| Ethereum |
| Leaders Technology |
Ethereum and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Leaders Technology
The main advantage of trading using opposite Ethereum and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.The idea behind Ethereum and Leaders Technology Investment 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.| Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. SK Hynix | Leaders Technology vs. HMM Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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