Correlation Between Ethereum Classic and Horizen

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

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

Diversification Opportunities for Ethereum Classic and Horizen

0.16

Correlation Coefficient

Ethereum Classic  Horizen

Average diversification

The 3 months correlation between Ethereum and Horizen is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum Classic and Horizen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizen and Ethereum Classic 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 Ethereum Classic are associated (or correlated) with Horizen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizen has no effect on the direction of Ethereum Classic i.e., Ethereum Classic and Horizen go up and down completely randomly.

Pair Corralation between Ethereum Classic and Horizen

Assuming the 90 days trading horizon Ethereum Classic is expected to under-perform the Horizen. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ethereum Classic is 2.34 times less risky than Horizen. The crypto coin trades about -0.12 of its potential returns per unit of risk. The Horizen is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,485  in Horizen on November 28, 2024 and sell it today you would lose (255.00) from holding Horizen or give up 17.17% of portfolio value over 90 days.

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

Ethereum Classic  vs.  Horizen

Ethereum Classic

Risk-Adjusted Performance

Very Weak

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

Horizen

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Horizen are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Horizen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum Classic and Horizen

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

The idea behind Ethereum Classic and Horizen 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.