Correlation Between Ethereum and First Trust
Can any of the company-specific risk be diversified away by investing in both Ethereum and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and First Trust S Network, you can compare the effects of market volatilities on Ethereum and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and First Trust.
Diversification Opportunities for Ethereum and First Trust
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ethereum and First is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and First Trust S Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust S 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust S has no effect on the direction of Ethereum i.e., Ethereum and First Trust go up and down completely randomly.
Pair Corralation between Ethereum and First Trust
Assuming the 90 days trading horizon Ethereum is expected to generate 4.03 times more return on investment than First Trust. However, Ethereum is 4.03 times more volatile than First Trust S Network. It trades about 0.1 of its potential returns per unit of risk. First Trust S Network is currently generating about 0.13 per unit of risk. If you would invest 234,981 in Ethereum on November 1, 2024 and sell it today you would earn a total of 76,439 from holding Ethereum or generate 32.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.47% |
| Values | Daily Returns |
Ethereum vs. First Trust S Network
Performance |
| Timeline |
| Ethereum |
| First Trust S |
Ethereum and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and First Trust
The main advantage of trading using opposite Ethereum and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.The idea behind Ethereum and First Trust S Network 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.| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust S Network | First Trust vs. First Trust Expanded | First Trust vs. First Trust Indxx |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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