Correlation Between Ethereum and IShares Trust

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

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

Diversification Opportunities for Ethereum and IShares Trust

0.26

Correlation Coefficient

Ethereum  IShares Trust

Modest diversification

The 3 months correlation between Ethereum and IShares is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Ethereum i.e., Ethereum and IShares Trust go up and down completely randomly.

Pair Corralation between Ethereum and IShares Trust

Assuming the 90 days trading horizon Ethereum is expected to generate 3.88 times more return on investment than IShares Trust. However, Ethereum is 3.88 times more volatile than iShares Trust . It trades about 0.12 of its potential returns per unit of risk. iShares Trust is currently generating about -0.1 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 Together
Strength	Very Weak
Accuracy	92.86%
Values	Daily Returns

Ethereum  vs.  iShares Trust

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.

iShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Trust 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 IShares Trust

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

The idea behind Ethereum and iShares Trust 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.