Correlation Between Everest and Coinbase Global

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

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

Diversification Opportunities for Everest and Coinbase Global

-0.32

Correlation Coefficient

Everest  Coinbase Global

Very good diversification

The 3 months correlation between Everest and Coinbase is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group and Coinbase Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinbase Global and Everest 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 Everest Group are associated (or correlated) with Coinbase Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinbase Global has no effect on the direction of Everest i.e., Everest and Coinbase Global go up and down completely randomly.

Pair Corralation between Everest and Coinbase Global

Allowing for the 90-day total investment horizon Everest is expected to generate 81.8 times less return on investment than Coinbase Global. But when comparing it to its historical volatility, Everest Group is 3.61 times less risky than Coinbase Global. It trades about 0.01 of its potential returns per unit of risk. Coinbase Global is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  18,336  in Coinbase Global on August 30, 2024 and sell it today you would earn a total of  12,762  from holding Coinbase Global or generate 69.6% return on investment over 90 days.

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

Everest Group  vs.  Coinbase Global

Everest Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everest Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Coinbase Global

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coinbase Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Coinbase Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everest and Coinbase Global

The main advantage of trading using opposite Everest and Coinbase Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everest position performs unexpectedly, Coinbase Global 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 Coinbase Global will offset losses from the drop in Coinbase Global's long position.

The idea behind Everest Group and Coinbase Global 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.