Correlation Between Ethena and Theta Fuel

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

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

Diversification Opportunities for Ethena and Theta Fuel

0.95

Correlation Coefficient

Ethena  Theta Fuel

Almost no diversification

The 3 months correlation between Ethena and Theta is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ethena and Theta Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Fuel 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 Theta Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Fuel has no effect on the direction of Ethena i.e., Ethena and Theta Fuel go up and down completely randomly.

Pair Corralation between Ethena and Theta Fuel

Assuming the 90 days trading horizon Ethena is expected to under-perform the Theta Fuel. In addition to that, Ethena is 2.1 times more volatile than Theta Fuel. It trades about -0.1 of its total potential returns per unit of risk. Theta Fuel is currently generating about -0.18 per unit of volatility. If you would invest  6.84  in Theta Fuel on December 27, 2024 and sell it today you would lose (2.80) from holding Theta Fuel or give up 40.94% 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.  Theta Fuel

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.

Theta Fuel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Theta Fuel 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 Theta Fuel shareholders.

Pair Trading with Ethena and Theta Fuel

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

The idea behind Ethena and Theta Fuel 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.