Correlation Between EOS and Litecoin

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

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

Diversification Opportunities for EOS and Litecoin

0.2

Correlation Coefficient

EOS  Litecoin

Modest diversification

The 3 months correlation between EOS and Litecoin is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding EOS and Litecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litecoin and EOS 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 EOS are associated (or correlated) with Litecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litecoin has no effect on the direction of EOS i.e., EOS and Litecoin go up and down completely randomly.

Pair Corralation between EOS and Litecoin

Assuming the 90 days trading horizon EOS is expected to under-perform the Litecoin. In addition to that, EOS is 1.13 times more volatile than Litecoin. It trades about -0.07 of its total potential returns per unit of risk. Litecoin is currently generating about 0.06 per unit of volatility. If you would invest  10,482  in Litecoin on November 28, 2024 and sell it today you would earn a total of  1,046  from holding Litecoin or generate 9.98% return on investment over 90 days.

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

EOS  vs.  Litecoin

EOS

Risk-Adjusted Performance

Very Weak

Over the last 90 days EOS 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 EOS shareholders.

Litecoin

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Litecoin are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Litecoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EOS and Litecoin

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

The idea behind EOS and Litecoin 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..