Correlation Between Ethena and GAMEC

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

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

Diversification Opportunities for Ethena and GAMEC

0.87

Correlation Coefficient

Ethena  GAMEC

Very poor diversification

The 3 months correlation between Ethena and GAMEC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ethena and GAMEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMEC and Ethena 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 Ethena are associated (or correlated) with GAMEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMEC has no effect on the direction of Ethena i.e., Ethena and GAMEC go up and down completely randomly.

Pair Corralation between Ethena and GAMEC

Assuming the 90 days trading horizon Ethena is expected to under-perform the GAMEC. In addition to that, Ethena is 1.33 times more volatile than GAMEC. It trades about -0.12 of its total potential returns per unit of risk. GAMEC is currently generating about -0.09 per unit of volatility. If you would invest  0.05  in GAMEC on December 30, 2024 and sell it today you would lose (0.02) from holding GAMEC or give up 39.69% of portfolio value over 90 days.

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

Ethena  vs.  GAMEC

Ethena

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethena 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 basic 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 Ethena shareholders.

GAMEC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GAMEC 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 GAMEC shareholders.

Pair Trading with Ethena and GAMEC

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

The idea behind Ethena and GAMEC 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.