Correlation Between ZkSync and Staked Ether
Can any of the company-specific risk be diversified away by investing in both ZkSync and Staked Ether 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 ZkSync and Staked Ether into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between zkSync and Staked Ether, you can compare the effects of market volatilities on ZkSync and Staked Ether 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 ZkSync with a short position of Staked Ether. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZkSync and Staked Ether.
Diversification Opportunities for ZkSync and Staked Ether
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ZkSync and Staked is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding zkSync and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether and ZkSync 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 zkSync are associated (or correlated) with Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of ZkSync i.e., ZkSync and Staked Ether go up and down completely randomly.
Pair Corralation between ZkSync and Staked Ether
Assuming the 90 days horizon ZkSync is expected to generate 2.55 times less return on investment than Staked Ether. In addition to that, ZkSync is 1.6 times more volatile than Staked Ether. It trades about 0.08 of its total potential returns per unit of risk. Staked Ether is currently generating about 0.31 per unit of volatility. If you would invest 253,302 in Staked Ether on August 24, 2024 and sell it today you would earn a total of 83,153 from holding Staked Ether or generate 32.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
zkSync vs. Staked Ether
Performance |
| Timeline |
| zkSync |
| Staked Ether |
ZkSync and Staked Ether Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZkSync and Staked Ether
The main advantage of trading using opposite ZkSync and Staked Ether positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZkSync position performs unexpectedly, Staked Ether 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 Staked Ether will offset losses from the drop in Staked Ether's long position.The idea behind zkSync and Staked Ether 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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