Correlation Between Ethereum and PlayAGS
Can any of the company-specific risk be diversified away by investing in both Ethereum and PlayAGS 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 PlayAGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and PlayAGS, you can compare the effects of market volatilities on Ethereum and PlayAGS 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 PlayAGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and PlayAGS.
Diversification Opportunities for Ethereum and PlayAGS
Very good diversification
The 3 months correlation between Ethereum and PlayAGS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS 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 PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Ethereum i.e., Ethereum and PlayAGS go up and down completely randomly.
Pair Corralation between Ethereum and PlayAGS
Assuming the 90 days trading horizon Ethereum is expected to generate 10.64 times more return on investment than PlayAGS. However, Ethereum is 10.64 times more volatile than PlayAGS. It trades about 0.09 of its potential returns per unit of risk. PlayAGS is currently generating about 0.08 per unit of risk. If you would invest 307,239 in Ethereum on October 20, 2024 and sell it today you would earn a total of 40,482 from holding Ethereum or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.18% |
| Values | Daily Returns |
Ethereum vs. PlayAGS
Performance |
| Timeline |
| Ethereum |
| PlayAGS |
Ethereum and PlayAGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and PlayAGS
The main advantage of trading using opposite Ethereum and PlayAGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, PlayAGS 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 PlayAGS will offset losses from the drop in PlayAGS's long position.The idea behind Ethereum and PlayAGS 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.| PlayAGS vs. Light Wonder | PlayAGS vs. Everi Holdings | PlayAGS vs. Inspired Entertainment | PlayAGS vs. International Game Technology |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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