Correlation Between Wrapped EETH and Cronos
Can any of the company-specific risk be diversified away by investing in both Wrapped EETH and Cronos 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 Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped eETH and Cronos, you can compare the effects of market volatilities on Wrapped EETH and Cronos 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 Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped EETH and Cronos.
Diversification Opportunities for Wrapped EETH and Cronos
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wrapped and Cronos is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped eETH and Cronos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos 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 Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos has no effect on the direction of Wrapped EETH i.e., Wrapped EETH and Cronos go up and down completely randomly.
Pair Corralation between Wrapped EETH and Cronos
Assuming the 90 days trading horizon Wrapped EETH is expected to generate 3.91 times less return on investment than Cronos. But when comparing it to its historical volatility, Wrapped eETH is 3.58 times less risky than Cronos. It trades about 0.17 of its potential returns per unit of risk. Cronos is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8.71 in Cronos on August 26, 2024 and sell it today you would earn a total of 11.29 from holding Cronos or generate 129.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wrapped eETH vs. Cronos
Performance |
| Timeline |
| Wrapped eETH |
| Cronos |
Wrapped EETH and Cronos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped EETH and Cronos
The main advantage of trading using opposite Wrapped EETH and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped EETH position performs unexpectedly, Cronos 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 Cronos will offset losses from the drop in Cronos' 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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