Correlation Between Ethereum and LeoNovus

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

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

Diversification Opportunities for Ethereum and LeoNovus

0.0

Correlation Coefficient

Ethereum  LeoNovus

Pay attention - limited upside

The 3 months correlation between Ethereum and LeoNovus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and LeoNovus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeoNovus 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 LeoNovus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeoNovus has no effect on the direction of Ethereum i.e., Ethereum and LeoNovus go up and down completely randomly.

Pair Corralation between Ethereum and LeoNovus

Assuming the 90 days trading horizon Ethereum is expected to generate 1.21 times less return on investment than LeoNovus. But when comparing it to its historical volatility, Ethereum is 1.69 times less risky than LeoNovus. It trades about 0.06 of its potential returns per unit of risk. LeoNovus is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.00  in LeoNovus on October 11, 2024 and sell it today you would lose (1.00) from holding LeoNovus or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	60.12%
Values	Daily Returns

Ethereum  vs.  LeoNovus

Ethereum

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 10 (%) 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.

LeoNovus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LeoNovus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LeoNovus is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ethereum and LeoNovus

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

The idea behind Ethereum and LeoNovus 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.