Correlation Between Etherfi and EM
Can any of the company-specific risk be diversified away by investing in both Etherfi and EM 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 Etherfi and EM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etherfi and EM, you can compare the effects of market volatilities on Etherfi and EM 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 Etherfi with a short position of EM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etherfi and EM.
Diversification Opportunities for Etherfi and EM
Pay attention - limited upside
The 3 months correlation between Etherfi and EM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Etherfi and EM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EM and Etherfi 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 Etherfi are associated (or correlated) with EM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EM has no effect on the direction of Etherfi i.e., Etherfi and EM go up and down completely randomly.
Pair Corralation between Etherfi and EM
If you would invest 149.00 in Etherfi on August 27, 2024 and sell it today you would earn a total of 72.00 from holding Etherfi or generate 48.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Etherfi vs. EM
Performance |
| Timeline |
| Etherfi |
| EM |
Etherfi and EM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etherfi and EM
The main advantage of trading using opposite Etherfi and EM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etherfi position performs unexpectedly, EM 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 EM will offset losses from the drop in EM's long position.The idea behind Etherfi and EM 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.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |