Correlation Between Ethena and Graph

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

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

Diversification Opportunities for Ethena and Graph

0.73

Correlation Coefficient

Ethena  Graph

Poor diversification

The 3 months correlation between Ethena and Graph is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ethena and The Graph in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graph 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 Graph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graph has no effect on the direction of Ethena i.e., Ethena and Graph go up and down completely randomly.

Pair Corralation between Ethena and Graph

Assuming the 90 days trading horizon Ethena is expected to generate 1.31 times more return on investment than Graph. However, Ethena is 1.31 times more volatile than The Graph. It trades about -0.06 of its potential returns per unit of risk. The Graph is currently generating about -0.15 per unit of risk. If you would invest  79.00  in Ethena on November 28, 2024 and sell it today you would lose (38.00) from holding Ethena or give up 48.1% of portfolio value over 90 days.

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

Ethena  vs.  The Graph

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for Ethena shareholders.

Graph

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Graph 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 March 2025. The latest tumult may also be a sign of longer-term up-swing for The Graph shareholders.

Pair Trading with Ethena and Graph

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

The idea behind Ethena and The Graph 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.