Correlation Between Ethereum and Itafos Corp

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

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

Diversification Opportunities for Ethereum and Itafos Corp

0.28

Correlation Coefficient

Ethereum  Itafos Corp

Modest diversification

The 3 months correlation between Ethereum and Itafos is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Itafos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itafos Corp 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 Itafos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itafos Corp has no effect on the direction of Ethereum i.e., Ethereum and Itafos Corp go up and down completely randomly.

Pair Corralation between Ethereum and Itafos Corp

Assuming the 90 days trading horizon Ethereum is expected to generate 2.04 times more return on investment than Itafos Corp. However, Ethereum is 2.04 times more volatile than Itafos Corp. It trades about 0.11 of its potential returns per unit of risk. Itafos Corp is currently generating about 0.16 per unit of risk. If you would invest  263,816  in Ethereum on October 26, 2024 and sell it today you would earn a total of  69,797  from holding Ethereum or generate 26.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Ethereum  vs.  Itafos Corp

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.

Itafos Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Itafos Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Itafos Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum and Itafos Corp

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

The idea behind Ethereum and Itafos Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.