Correlation Between Ethereum and Beazley PLC

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

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

Diversification Opportunities for Ethereum and Beazley PLC

-0.6

Correlation Coefficient

Ethereum  Beazley PLC

Excellent diversification

The 3 months correlation between Ethereum and Beazley is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Beazley PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazley PLC and Ethereum 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 are associated (or correlated) with Beazley PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazley PLC has no effect on the direction of Ethereum i.e., Ethereum and Beazley PLC go up and down completely randomly.

Pair Corralation between Ethereum and Beazley PLC

Assuming the 90 days trading horizon Ethereum is expected to under-perform the Beazley PLC. In addition to that, Ethereum is 1.76 times more volatile than Beazley PLC. It trades about -0.2 of its total potential returns per unit of risk. Beazley PLC is currently generating about 0.04 per unit of volatility. If you would invest  981.00  in Beazley PLC on December 23, 2024 and sell it today you would earn a total of  39.00  from holding Beazley PLC or generate 3.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Ethereum  vs.  Beazley PLC

Ethereum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethereum 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 technical 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 Ethereum shareholders.

Beazley PLC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beazley PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Beazley PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ethereum and Beazley PLC

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

The idea behind Ethereum and Beazley PLC 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.