Correlation Between Wrapped EETH and Aelf
Can any of the company-specific risk be diversified away by investing in both Wrapped EETH and Aelf 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 Aelf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wrapped eETH and aelf, you can compare the effects of market volatilities on Wrapped EETH and Aelf 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 Aelf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wrapped EETH and Aelf.
Diversification Opportunities for Wrapped EETH and Aelf
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wrapped and Aelf is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped eETH and aelf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aelf 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 Aelf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aelf has no effect on the direction of Wrapped EETH i.e., Wrapped EETH and Aelf go up and down completely randomly.
Pair Corralation between Wrapped EETH and Aelf
Assuming the 90 days trading horizon Wrapped EETH is expected to generate 1.66 times less return on investment than Aelf. But when comparing it to its historical volatility, Wrapped eETH is 1.95 times less risky than Aelf. It trades about 0.33 of its potential returns per unit of risk. aelf is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 36.00 in aelf on August 30, 2024 and sell it today you would earn a total of 23.00 from holding aelf or generate 63.89% 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. aelf
Performance |
| Timeline |
| Wrapped eETH |
| aelf |
Wrapped EETH and Aelf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wrapped EETH and Aelf
The main advantage of trading using opposite Wrapped EETH and Aelf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wrapped EETH position performs unexpectedly, Aelf 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 Aelf will offset losses from the drop in Aelf's long position.The idea behind Wrapped eETH and aelf 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |