Correlation Between CEL and Etherfi

Can any of the company-specific risk be diversified away by investing in both CEL 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 CEL and Etherfi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CEL and Etherfi, you can compare the effects of market volatilities on CEL 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 CEL with a short position of Etherfi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEL and Etherfi.

Diversification Opportunities for CEL and Etherfi

0.48

Correlation Coefficient

CEL  Etherfi

Very weak diversification

The 3 months correlation between CEL and Etherfi is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CEL and Etherfi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etherfi and CEL 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 CEL 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 CEL i.e., CEL and Etherfi go up and down completely randomly.

Pair Corralation between CEL and Etherfi

Assuming the 90 days trading horizon CEL is expected to generate 4.39 times more return on investment than Etherfi. However, CEL is 4.39 times more volatile than Etherfi. It trades about 0.08 of its potential returns per unit of risk. Etherfi is currently generating about -0.3 per unit of risk. If you would invest  19.00  in CEL on December 30, 2024 and sell it today you would lose (10.01) from holding CEL or give up 52.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CEL  vs.  Etherfi

CEL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, CEL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Etherfi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Etherfi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Etherfi shareholders.

Pair Trading with CEL and Etherfi

The main advantage of trading using opposite CEL and Etherfi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEL 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 CEL 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.