Correlation Between Ethereum and American Funds

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

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

Diversification Opportunities for Ethereum and American Funds

-0.4

Correlation Coefficient

Ethereum  American Funds

Very good diversification

The 3 months correlation between Ethereum and American is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and American Funds Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Emerging has no effect on the direction of Ethereum i.e., Ethereum and American Funds go up and down completely randomly.

Pair Corralation between Ethereum and American Funds

Assuming the 90 days trading horizon Ethereum is expected to generate 13.52 times more return on investment than American Funds. However, Ethereum is 13.52 times more volatile than American Funds Emerging. It trades about 0.12 of its potential returns per unit of risk. American Funds Emerging is currently generating about -0.27 per unit of risk. If you would invest  312,799  in Ethereum on October 9, 2024 and sell it today you would earn a total of  55,026  from holding Ethereum or generate 17.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.86%
Values	Daily Returns

Ethereum  vs.  American Funds Emerging

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.

American Funds Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Funds 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 American Funds

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

The idea behind Ethereum and American Funds Emerging 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.