Correlation Between Ethereum and Fibra Mty

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

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

Diversification Opportunities for Ethereum and Fibra Mty

0.41

Correlation Coefficient

Ethereum  Fibra Mty

Very weak diversification

The 3 months correlation between Ethereum and Fibra is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Fibra Mty SAPI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Mty SAPI 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 Fibra Mty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Mty SAPI has no effect on the direction of Ethereum i.e., Ethereum and Fibra Mty go up and down completely randomly.

Pair Corralation between Ethereum and Fibra Mty

Assuming the 90 days trading horizon Ethereum is expected to generate 4.01 times more return on investment than Fibra Mty. However, Ethereum is 4.01 times more volatile than Fibra Mty SAPI. It trades about 0.01 of its potential returns per unit of risk. Fibra Mty SAPI is currently generating about -0.12 per unit of risk. If you would invest  333,104  in Ethereum on October 26, 2024 and sell it today you would lose (2,825) from holding Ethereum or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Ethereum  vs.  Fibra Mty SAPI

Ethereum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 8 (%) 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.

Fibra Mty SAPI

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra Mty SAPI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fibra Mty 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 Fibra Mty

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

The idea behind Ethereum and Fibra Mty SAPI 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.