Correlation Between Ethereum and Deutsche Communications

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

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

Diversification Opportunities for Ethereum and Deutsche Communications

0.04

Correlation Coefficient

Ethereum  Deutsche Communications

Significant diversification

The 3 months correlation between Ethereum and Deutsche is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Deutsche Munications Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Communications 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 Deutsche Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Communications has no effect on the direction of Ethereum i.e., Ethereum and Deutsche Communications go up and down completely randomly.

Pair Corralation between Ethereum and Deutsche Communications

Assuming the 90 days trading horizon Ethereum is expected to under-perform the Deutsche Communications. In addition to that, Ethereum is 2.73 times more volatile than Deutsche Munications Fund. It trades about -0.2 of its total potential returns per unit of risk. Deutsche Munications Fund is currently generating about -0.06 per unit of volatility. If you would invest  3,876  in Deutsche Munications Fund on December 22, 2024 and sell it today you would lose (210.00) from holding Deutsche Munications Fund or give up 5.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Ethereum  vs.  Deutsche Munications Fund

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.

Deutsche Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deutsche Munications Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Deutsche Communications 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 Deutsche Communications

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

The idea behind Ethereum and Deutsche Munications Fund 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.