Correlation Between Ethereum and FT Vest
Can any of the company-specific risk be diversified away by investing in both Ethereum and FT Vest 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 FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and FT Vest SMID, you can compare the effects of market volatilities on Ethereum and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and FT Vest.
Diversification Opportunities for Ethereum and FT Vest
Very weak diversification
The 3 months correlation between Ethereum and SDVD is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and FT Vest SMID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest SMID 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest SMID has no effect on the direction of Ethereum i.e., Ethereum and FT Vest go up and down completely randomly.
Pair Corralation between Ethereum and FT Vest
Assuming the 90 days trading horizon Ethereum is expected to under-perform the FT Vest. In addition to that, Ethereum is 4.13 times more volatile than FT Vest SMID. It trades about -0.04 of its total potential returns per unit of risk. FT Vest SMID is currently generating about 0.27 per unit of volatility. If you would invest 2,152 in FT Vest SMID on October 24, 2024 and sell it today you would earn a total of 94.00 from holding FT Vest SMID or generate 4.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 85.71% |
Values | Daily Returns |
Ethereum vs. FT Vest SMID
Performance |
Timeline |
Ethereum |
FT Vest SMID |
Ethereum and FT Vest Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ethereum and FT Vest
The main advantage of trading using opposite Ethereum and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.The idea behind Ethereum and FT Vest SMID 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.FT Vest vs. JPMorgan Equity Premium | FT Vest vs. Amplify CWP Enhanced | FT Vest vs. JPMorgan Nasdaq Equity | FT Vest vs. ETC 6 Meridian |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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