Correlation Between Ethereum and Staked Ether
Can any of the company-specific risk be diversified away by investing in both Ethereum and Staked Ether 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 Staked Ether into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Staked Ether, you can compare the effects of market volatilities on Ethereum and Staked Ether 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 Staked Ether. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Staked Ether.
Diversification Opportunities for Ethereum and Staked Ether
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Ethereum and Staked is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether 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 Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of Ethereum i.e., Ethereum and Staked Ether go up and down completely randomly.
Pair Corralation between Ethereum and Staked Ether
Assuming the 90 days trading horizon Ethereum is expected to generate 1.0 times more return on investment than Staked Ether. However, Ethereum is 1.0 times more volatile than Staked Ether. It trades about 0.31 of its potential returns per unit of risk. Staked Ether is currently generating about 0.31 per unit of risk. If you would invest 252,233 in Ethereum on August 23, 2024 and sell it today you would earn a total of 84,377 from holding Ethereum or generate 33.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethereum vs. Staked Ether
Performance |
| Timeline |
| Ethereum |
| Staked Ether |
Ethereum and Staked Ether Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Staked Ether
The main advantage of trading using opposite Ethereum and Staked Ether positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Staked Ether 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 Staked Ether will offset losses from the drop in Staked Ether's long position.| Ethereum vs. Ethereum Classic | Ethereum vs. Ethereum PoW | Ethereum vs. Ethereum Name Service | Ethereum vs. Staked Ether |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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