Correlation Between Ethereum and Baron Emerging

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

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

Diversification Opportunities for Ethereum and Baron Emerging

-0.77

Correlation Coefficient

Ethereum  Baron Emerging

Pay attention - limited upside

The 3 months correlation between Ethereum and Baron is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets 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 Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Ethereum i.e., Ethereum and Baron Emerging go up and down completely randomly.

Pair Corralation between Ethereum and Baron Emerging

Assuming the 90 days trading horizon Ethereum is expected to under-perform the Baron Emerging. In addition to that, Ethereum is 6.2 times more volatile than Baron Emerging Markets. It trades about -0.23 of its total potential returns per unit of risk. Baron Emerging Markets is currently generating about -0.29 per unit of volatility. If you would invest  1,549  in Baron Emerging Markets on October 12, 2024 and sell it today you would lose (52.00) from holding Baron Emerging Markets or give up 3.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Ethereum  vs.  Baron Emerging Markets

Ethereum

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Baron Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ethereum and Baron Emerging

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

The idea behind Ethereum and Baron Emerging Markets 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.