Correlation Between Ethereum PoW and SC
Can any of the company-specific risk be diversified away by investing in both Ethereum PoW and SC 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 PoW and SC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum PoW and SC, you can compare the effects of market volatilities on Ethereum PoW and SC 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 PoW with a short position of SC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum PoW and SC.
Diversification Opportunities for Ethereum PoW and SC
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ethereum and SC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum PoW and SC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SC and Ethereum PoW 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 PoW are associated (or correlated) with SC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SC has no effect on the direction of Ethereum PoW i.e., Ethereum PoW and SC go up and down completely randomly.
Pair Corralation between Ethereum PoW and SC
Assuming the 90 days trading horizon Ethereum PoW is expected to generate 1.38 times more return on investment than SC. However, Ethereum PoW is 1.38 times more volatile than SC. It trades about 0.05 of its potential returns per unit of risk. SC is currently generating about 0.03 per unit of risk. If you would invest 346.00 in Ethereum PoW on August 30, 2024 and sell it today you would earn a total of 73.00 from holding Ethereum PoW or generate 21.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ethereum PoW vs. SC
Performance |
| Timeline |
| Ethereum PoW |
| SC |
Ethereum PoW and SC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum PoW and SC
The main advantage of trading using opposite Ethereum PoW and SC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum PoW position performs unexpectedly, SC 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 SC will offset losses from the drop in SC's long position.The idea behind Ethereum PoW and SC 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |