Correlation Between Ethereum and BANK OF CHINA
Can any of the company-specific risk be diversified away by investing in both Ethereum and BANK OF CHINA 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 BANK OF CHINA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and BANK OF CHINA, you can compare the effects of market volatilities on Ethereum and BANK OF CHINA 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 BANK OF CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and BANK OF CHINA.
Diversification Opportunities for Ethereum and BANK OF CHINA
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ethereum and BANK is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and BANK OF CHINA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK OF CHINA 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 BANK OF CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OF CHINA has no effect on the direction of Ethereum i.e., Ethereum and BANK OF CHINA go up and down completely randomly.
Pair Corralation between Ethereum and BANK OF CHINA
Assuming the 90 days trading horizon Ethereum is expected to under-perform the BANK OF CHINA. In addition to that, Ethereum is 2.51 times more volatile than BANK OF CHINA. It trades about -0.2 of its total potential returns per unit of risk. BANK OF CHINA is currently generating about 0.17 per unit of volatility. If you would invest 47.00 in BANK OF CHINA on October 11, 2024 and sell it today you would earn a total of 2.00 from holding BANK OF CHINA or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Ethereum vs. BANK OF CHINA
Performance |
| Timeline |
| Ethereum |
| BANK OF CHINA |
Ethereum and BANK OF CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and BANK OF CHINA
The main advantage of trading using opposite Ethereum and BANK OF CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, BANK OF CHINA 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 BANK OF CHINA will offset losses from the drop in BANK OF CHINA's long position.The idea behind Ethereum and BANK OF CHINA 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.| BANK OF CHINA vs. Apple Inc | BANK OF CHINA vs. Apple Inc | BANK OF CHINA vs. Apple Inc | BANK OF CHINA vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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