Correlation Between Ethereum and ETRACS 2x

Can any of the company-specific risk be diversified away by investing in both Ethereum and ETRACS 2x 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 ETRACS 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ethereum and ETRACS 2x Leveraged, you can compare the effects of market volatilities on Ethereum and ETRACS 2x 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 ETRACS 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and ETRACS 2x.

Diversification Opportunities for Ethereum and ETRACS 2x

0.11

Correlation Coefficient

Ethereum  ETRACS 2x

Average diversification

The 3 months correlation between Ethereum and ETRACS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and ETRACS 2x Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS 2x Leveraged 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 ETRACS 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS 2x Leveraged has no effect on the direction of Ethereum i.e., Ethereum and ETRACS 2x go up and down completely randomly.

Pair Corralation between Ethereum and ETRACS 2x

Assuming the 90 days trading horizon Ethereum is expected to generate 49.24 times less return on investment than ETRACS 2x. But when comparing it to its historical volatility, Ethereum is 36.58 times less risky than ETRACS 2x. It trades about 0.1 of its potential returns per unit of risk. ETRACS 2x Leveraged is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,405  in ETRACS 2x Leveraged on October 12, 2024 and sell it today you would earn a total of  124.00  from holding ETRACS 2x Leveraged or generate 3.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.84%
Values	Daily Returns

Ethereum  vs.  ETRACS 2x Leveraged

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.

ETRACS 2x Leveraged

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days ETRACS 2x Leveraged has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, ETRACS 2x unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum and ETRACS 2x

The main advantage of trading using opposite Ethereum and ETRACS 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, ETRACS 2x 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 ETRACS 2x will offset losses from the drop in ETRACS 2x's long position.

The idea behind Ethereum and ETRACS 2x Leveraged 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.