Correlation Between Ethereum and Global Absolute
Can any of the company-specific risk be diversified away by investing in both Ethereum and Global Absolute 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 Global Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Global Absolute Return, you can compare the effects of market volatilities on Ethereum and Global Absolute 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 Global Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Global Absolute.
Diversification Opportunities for Ethereum and Global Absolute
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ethereum and Global is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Global Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Absolute Return 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 Global Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Absolute Return has no effect on the direction of Ethereum i.e., Ethereum and Global Absolute go up and down completely randomly.
Pair Corralation between Ethereum and Global Absolute
Assuming the 90 days trading horizon Ethereum is expected to generate 9.7 times more return on investment than Global Absolute. However, Ethereum is 9.7 times more volatile than Global Absolute Return. It trades about 0.07 of its potential returns per unit of risk. Global Absolute Return is currently generating about 0.01 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 Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ethereum vs. Global Absolute Return
Performance |
| Timeline |
| Ethereum |
| Global Absolute Return |
Ethereum and Global Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Global Absolute
The main advantage of trading using opposite Ethereum and Global Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Global Absolute 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 Global Absolute will offset losses from the drop in Global Absolute's long position.The idea behind Ethereum and Global Absolute Return 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.| Global Absolute vs. Gabelli Global Financial | Global Absolute vs. Vanguard Financials Index | Global Absolute vs. Mesirow Financial Small | Global Absolute vs. Blackrock Financial Institutions |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |