Correlation Between Ethereum and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both Ethereum and Capricorn Metals 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 Capricorn Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Capricorn Metals, you can compare the effects of market volatilities on Ethereum and Capricorn Metals 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 Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Capricorn Metals.
Diversification Opportunities for Ethereum and Capricorn Metals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ethereum and Capricorn is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals 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 Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of Ethereum i.e., Ethereum and Capricorn Metals go up and down completely randomly.
Pair Corralation between Ethereum and Capricorn Metals
Assuming the 90 days trading horizon Ethereum is expected to generate 4.44 times less return on investment than Capricorn Metals. In addition to that, Ethereum is 2.32 times more volatile than Capricorn Metals. It trades about 0.02 of its total potential returns per unit of risk. Capricorn Metals is currently generating about 0.22 per unit of volatility. If you would invest 666.00 in Capricorn Metals on October 20, 2024 and sell it today you would earn a total of 51.00 from holding Capricorn Metals or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Ethereum vs. Capricorn Metals
Performance |
| Timeline |
| Ethereum |
| Capricorn Metals |
Ethereum and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Capricorn Metals
The main advantage of trading using opposite Ethereum and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Capricorn Metals 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.The idea behind Ethereum and Capricorn Metals 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.| Capricorn Metals vs. Northern Star Resources | Capricorn Metals vs. Evolution Mining | Capricorn Metals vs. Bluescope Steel | Capricorn Metals vs. De Grey Mining |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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