Correlation Between Ethereum and EOS

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

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

Diversification Opportunities for Ethereum and EOS

0.82

Correlation Coefficient

Ethereum  EOS

Very poor diversification

The 3 months correlation between Ethereum and EOS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and EOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOS 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 EOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOS has no effect on the direction of Ethereum i.e., Ethereum and EOS go up and down completely randomly.

Pair Corralation between Ethereum and EOS

Assuming the 90 days trading horizon Ethereum is expected to generate 0.51 times more return on investment than EOS. However, Ethereum is 1.95 times less risky than EOS. It trades about -0.12 of its potential returns per unit of risk. EOS is currently generating about -0.07 per unit of risk. If you would invest  359,372  in Ethereum on November 28, 2024 and sell it today you would lose (110,571) from holding Ethereum or give up 30.77% of portfolio value over 90 days.

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

Ethereum  vs.  EOS

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 March 2025. The latest tumult may also be a sign of longer-term up-swing for Ethereum shareholders.

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.

Pair Trading with Ethereum and EOS

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

The idea behind Ethereum and EOS 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.