Correlation Between Ethereum and Value Fund

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

By analyzing existing cross correlation between Ethereum and Value Fund R6, you can compare the effects of market volatilities on Ethereum and Value Fund 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 Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Value Fund.

Diversification Opportunities for Ethereum and Value Fund

-0.12

Correlation Coefficient

Ethereum  Value Fund

Good diversification

The 3 months correlation between Ethereum and Value is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Value Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund R6 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 Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund R6 has no effect on the direction of Ethereum i.e., Ethereum and Value Fund go up and down completely randomly.

Pair Corralation between Ethereum and Value Fund

Assuming the 90 days trading horizon Ethereum is expected to under-perform the Value Fund. In addition to that, Ethereum is 5.71 times more volatile than Value Fund R6. It trades about -0.18 of its total potential returns per unit of risk. Value Fund R6 is currently generating about 0.09 per unit of volatility. If you would invest  773.00  in Value Fund R6 on December 21, 2024 and sell it today you would earn a total of  30.00  from holding Value Fund R6 or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Ethereum  vs.  Value Fund R6

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.

Value Fund R6

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Fund R6 are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Value Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ethereum and Value Fund

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

The idea behind Ethereum and Value Fund R6 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.