Correlation Between NYSE Composite and Etherfi
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Etherfi 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 NYSE Composite and Etherfi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Etherfi, you can compare the effects of market volatilities on NYSE Composite and Etherfi 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 NYSE Composite with a short position of Etherfi. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Etherfi.
Diversification Opportunities for NYSE Composite and Etherfi
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Etherfi is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Etherfi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etherfi and NYSE Composite 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 NYSE Composite are associated (or correlated) with Etherfi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etherfi has no effect on the direction of NYSE Composite i.e., NYSE Composite and Etherfi go up and down completely randomly.
Pair Corralation between NYSE Composite and Etherfi
Assuming the 90 days trading horizon NYSE Composite is expected to generate 14.13 times less return on investment than Etherfi. But when comparing it to its historical volatility, NYSE Composite is 14.19 times less risky than Etherfi. It trades about 0.13 of its potential returns per unit of risk. Etherfi is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 156.00 in Etherfi on August 24, 2024 and sell it today you would earn a total of 32.00 from holding Etherfi or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Etherfi
Performance |
| Timeline |
NYSE Composite and Etherfi Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Etherfi
Pair trading matchups for Etherfi
Pair Trading with NYSE Composite and Etherfi
The main advantage of trading using opposite NYSE Composite and Etherfi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Etherfi 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 Etherfi will offset losses from the drop in Etherfi's long position.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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