Correlation Between Ethereum and RELX PLC
Can any of the company-specific risk be diversified away by investing in both Ethereum and RELX PLC 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 RELX PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and RELX PLC, you can compare the effects of market volatilities on Ethereum and RELX PLC 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 RELX PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and RELX PLC.
Diversification Opportunities for Ethereum and RELX PLC
Very weak diversification
The 3 months correlation between Ethereum and RELX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and RELX PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELX PLC 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 RELX PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELX PLC has no effect on the direction of Ethereum i.e., Ethereum and RELX PLC go up and down completely randomly.
Pair Corralation between Ethereum and RELX PLC
Assuming the 90 days trading horizon Ethereum is expected to under-perform the RELX PLC. In addition to that, Ethereum is 3.86 times more volatile than RELX PLC. It trades about -0.19 of its total potential returns per unit of risk. RELX PLC is currently generating about 0.1 per unit of volatility. If you would invest 4,478 in RELX PLC on October 14, 2024 and sell it today you would earn a total of 68.00 from holding RELX PLC or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.95% |
| Values | Daily Returns |
Ethereum vs. RELX PLC
Performance |
| Timeline |
| Ethereum |
| RELX PLC |
Ethereum and RELX PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and RELX PLC
The main advantage of trading using opposite Ethereum and RELX PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, RELX PLC 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 RELX PLC will offset losses from the drop in RELX PLC's long position.The idea behind Ethereum and RELX PLC 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.| RELX PLC vs. Scientific Games | RELX PLC vs. Hochschild Mining plc | RELX PLC vs. Wenzhou Kangning Hospital | RELX PLC vs. HEALTHSTREAM |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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