Correlation Between Ethereum and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Ethereum and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Rheinmetall AG, you can compare the effects of market volatilities on Ethereum and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Rheinmetall.
Diversification Opportunities for Ethereum and Rheinmetall
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ethereum and Rheinmetall is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Ethereum i.e., Ethereum and Rheinmetall go up and down completely randomly.
Pair Corralation between Ethereum and Rheinmetall
Assuming the 90 days trading horizon Ethereum is expected to under-perform the Rheinmetall. In addition to that, Ethereum is 1.86 times more volatile than Rheinmetall AG. It trades about -0.06 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.08 per unit of volatility. If you would invest 63,002 in Rheinmetall AG on October 10, 2024 and sell it today you would earn a total of 1,718 from holding Rheinmetall AG or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ethereum vs. Rheinmetall AG
Performance |
| Timeline |
| Ethereum |
| Rheinmetall AG |
Ethereum and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Rheinmetall
The main advantage of trading using opposite Ethereum and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.The idea behind Ethereum and Rheinmetall AG 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.| Rheinmetall vs. Walmart | Rheinmetall vs. BYD Co | Rheinmetall vs. Volkswagen AG | Rheinmetall vs. Volkswagen AG Non Vtg |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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