Correlation Between Ethereum and International Emerging

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

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

Diversification Opportunities for Ethereum and International Emerging

-0.76

Correlation Coefficient

Ethereum  International Emerging

Pay attention - limited upside

The 3 months correlation between Ethereum and International is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and International Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Emerging 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 International Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Emerging has no effect on the direction of Ethereum i.e., Ethereum and International Emerging go up and down completely randomly.

Pair Corralation between Ethereum and International Emerging

Assuming the 90 days trading horizon Ethereum is expected to generate 5.04 times more return on investment than International Emerging. However, Ethereum is 5.04 times more volatile than International Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. International Emerging Markets is currently generating about -0.13 per unit of risk. If you would invest  238,440  in Ethereum on October 9, 2024 and sell it today you would earn a total of  129,385  from holding Ethereum or generate 54.26% return on investment over 90 days.

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

Ethereum  vs.  International Emerging Markets

Ethereum

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 15 (%) 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.

International Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ethereum and International Emerging

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

The idea behind Ethereum and International Emerging Markets 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.