Correlation Between Wrapped EETH and Cloud
Can any of the company-specific risk be diversified away by investing in both Wrapped EETH and Cloud 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 Wrapped EETH and Cloud into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped eETH and Cloud, you can compare the effects of market volatilities on Wrapped EETH and Cloud 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 Wrapped EETH with a short position of Cloud. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped EETH and Cloud.
Diversification Opportunities for Wrapped EETH and Cloud
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wrapped and Cloud is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped eETH and Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud and Wrapped EETH 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 Wrapped eETH are associated (or correlated) with Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud has no effect on the direction of Wrapped EETH i.e., Wrapped EETH and Cloud go up and down completely randomly.
Pair Corralation between Wrapped EETH and Cloud
Assuming the 90 days trading horizon Wrapped EETH is expected to generate 29.54 times less return on investment than Cloud. But when comparing it to its historical volatility, Wrapped eETH is 35.71 times less risky than Cloud. It trades about 0.16 of its potential returns per unit of risk. Cloud is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Cloud on August 24, 2024 and sell it today you would earn a total of 55.00 from holding Cloud or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped eETH vs. Cloud
Performance |
| Timeline |
| Wrapped eETH |
| Cloud |
Wrapped EETH and Cloud Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped EETH and Cloud
The main advantage of trading using opposite Wrapped EETH and Cloud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped EETH position performs unexpectedly, Cloud 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 Cloud will offset losses from the drop in Cloud's long position.| Wrapped EETH vs. Wrapped Beacon ETH | Wrapped EETH vs. Staked Ether | Wrapped EETH vs. EigenLayer | Wrapped EETH vs. EOSDAC |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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