Correlation Between Worldcoin and Etherfi
Can any of the company-specific risk be diversified away by investing in both Worldcoin 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 Worldcoin and Etherfi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldcoin and Etherfi, you can compare the effects of market volatilities on Worldcoin 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 Worldcoin with a short position of Etherfi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldcoin and Etherfi.
Diversification Opportunities for Worldcoin and Etherfi
Poor diversification
The 3 months correlation between Worldcoin and Etherfi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Worldcoin and Etherfi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etherfi and Worldcoin 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 Worldcoin 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 Worldcoin i.e., Worldcoin and Etherfi go up and down completely randomly.
Pair Corralation between Worldcoin and Etherfi
Assuming the 90 days trading horizon Worldcoin is expected to generate 2.14 times less return on investment than Etherfi. But when comparing it to its historical volatility, Worldcoin is 1.36 times less risky than Etherfi. It trades about 0.14 of its potential returns per unit of risk. Etherfi is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 149.00 in Etherfi on August 27, 2024 and sell it today you would earn a total of 61.00 from holding Etherfi or generate 40.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldcoin vs. Etherfi
Performance |
| Timeline |
| Worldcoin |
| Etherfi |
Worldcoin and Etherfi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldcoin and Etherfi
The main advantage of trading using opposite Worldcoin and Etherfi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldcoin 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.The idea behind Worldcoin and Etherfi 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |