Correlation Between Ethereum and SolarEdge Technologies
Can any of the company-specific risk be diversified away by investing in both Ethereum and SolarEdge Technologies 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 SolarEdge Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and SolarEdge Technologies, you can compare the effects of market volatilities on Ethereum and SolarEdge Technologies 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 SolarEdge Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and SolarEdge Technologies.
Diversification Opportunities for Ethereum and SolarEdge Technologies
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ethereum and SolarEdge is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and SolarEdge Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarEdge Technologies 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 SolarEdge Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarEdge Technologies has no effect on the direction of Ethereum i.e., Ethereum and SolarEdge Technologies go up and down completely randomly.
Pair Corralation between Ethereum and SolarEdge Technologies
Assuming the 90 days trading horizon Ethereum is expected to generate 0.53 times more return on investment than SolarEdge Technologies. However, Ethereum is 1.87 times less risky than SolarEdge Technologies. It trades about 0.07 of its potential returns per unit of risk. SolarEdge Technologies is currently generating about -0.02 per unit of risk. If you would invest 333,738 in Ethereum on October 21, 2024 and sell it today you would earn a total of 13,983 from holding Ethereum or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Ethereum vs. SolarEdge Technologies
Performance |
| Timeline |
| Ethereum |
| SolarEdge Technologies |
Ethereum and SolarEdge Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and SolarEdge Technologies
The main advantage of trading using opposite Ethereum and SolarEdge Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, SolarEdge Technologies 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 SolarEdge Technologies will offset losses from the drop in SolarEdge Technologies' long position.The idea behind Ethereum and SolarEdge Technologies 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.| SolarEdge Technologies vs. First Solar | SolarEdge Technologies vs. Xinyi Solar Holdings | SolarEdge Technologies vs. Sunrun Inc | SolarEdge Technologies vs. JinkoSolar Holding 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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