Correlation Between Ethereum and New Zealand

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

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

Diversification Opportunities for Ethereum and New Zealand

0.9

Correlation Coefficient

Ethereum  New Zealand

Almost no diversification

The 3 months correlation between Ethereum and New is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and New Zealand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Energy 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 New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Energy has no effect on the direction of Ethereum i.e., Ethereum and New Zealand go up and down completely randomly.

Pair Corralation between Ethereum and New Zealand

Assuming the 90 days trading horizon Ethereum is expected to generate 0.44 times more return on investment than New Zealand. However, Ethereum is 2.28 times less risky than New Zealand. It trades about -0.17 of its potential returns per unit of risk. New Zealand Energy is currently generating about -0.15 per unit of risk. If you would invest  333,738  in Ethereum on December 20, 2024 and sell it today you would lose (128,159) from holding Ethereum or give up 38.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Ethereum  vs.  New Zealand Energy

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

New Zealand Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Zealand Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ethereum and New Zealand

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

The idea behind Ethereum and New Zealand Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.