Correlation Between Ethena and Orca

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

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

Diversification Opportunities for Ethena and Orca

0.91

Correlation Coefficient

Ethena  Orca

Almost no diversification

The 3 months correlation between Ethena and Orca is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ethena and Orca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca 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 Orca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca has no effect on the direction of Ethena i.e., Ethena and Orca go up and down completely randomly.

Pair Corralation between Ethena and Orca

Assuming the 90 days trading horizon Ethena is expected to under-perform the Orca. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ethena is 1.84 times less risky than Orca. The crypto coin trades about -0.12 of its potential returns per unit of risk. The Orca is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  391.00  in Orca on December 29, 2024 and sell it today you would lose (157.00) from holding Orca or give up 40.15% of portfolio value over 90 days.

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

Ethena  vs.  Orca

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.

Orca

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orca has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Orca is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ethena and Orca

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

The idea behind Ethena and Orca 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.