Correlation Between Ethereum and Ovintiv
Can any of the company-specific risk be diversified away by investing in both Ethereum and Ovintiv 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 Ovintiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Ovintiv, you can compare the effects of market volatilities on Ethereum and Ovintiv 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 Ovintiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Ovintiv.
Diversification Opportunities for Ethereum and Ovintiv
Weak diversification
The 3 months correlation between Ethereum and Ovintiv is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Ovintiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovintiv 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 Ovintiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovintiv has no effect on the direction of Ethereum i.e., Ethereum and Ovintiv go up and down completely randomly.
Pair Corralation between Ethereum and Ovintiv
Assuming the 90 days trading horizon Ethereum is expected to generate 2.0 times more return on investment than Ovintiv. However, Ethereum is 2.0 times more volatile than Ovintiv. It trades about 0.1 of its potential returns per unit of risk. Ovintiv is currently generating about 0.07 per unit of risk. If you would invest 236,364 in Ethereum on October 31, 2024 and sell it today you would earn a total of 75,056 from holding Ethereum or generate 31.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.35% |
| Values | Daily Returns |
Ethereum vs. Ovintiv
Performance |
| Timeline |
| Ethereum |
| Ovintiv |
Ethereum and Ovintiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Ovintiv
The main advantage of trading using opposite Ethereum and Ovintiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Ovintiv 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 Ovintiv will offset losses from the drop in Ovintiv's long position.The idea behind Ethereum and Ovintiv 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.| Ovintiv vs. Baytex Energy Corp | Ovintiv vs. Obsidian Energy | Ovintiv vs. Canadian Natural Resources | Ovintiv vs. Vermilion Energy |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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