Correlation Between Etherfi and Golem Network

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

By analyzing existing cross correlation between Etherfi and Golem Network Token, you can compare the effects of market volatilities on Etherfi and Golem Network 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 Etherfi with a short position of Golem Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etherfi and Golem Network.

Diversification Opportunities for Etherfi and Golem Network

0.77

Correlation Coefficient

Etherfi  Golem Network

Poor diversification

The 3 months correlation between Etherfi and Golem is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Etherfi and Golem Network Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golem Network Token and Etherfi 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 Etherfi are associated (or correlated) with Golem Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golem Network Token has no effect on the direction of Etherfi i.e., Etherfi and Golem Network go up and down completely randomly.

Pair Corralation between Etherfi and Golem Network

Assuming the 90 days trading horizon Etherfi is expected to under-perform the Golem Network. In addition to that, Etherfi is 1.07 times more volatile than Golem Network Token. It trades about -0.3 of its total potential returns per unit of risk. Golem Network Token is currently generating about -0.08 per unit of volatility. If you would invest  37.00  in Golem Network Token on December 30, 2024 and sell it today you would lose (12.00) from holding Golem Network Token or give up 32.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Etherfi  vs.  Golem Network Token

Etherfi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Etherfi 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 fundamental 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 Etherfi shareholders.

Golem Network Token

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golem Network Token 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 primary 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 Golem Network Token shareholders.

Pair Trading with Etherfi and Golem Network

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

The idea behind Etherfi and Golem Network Token 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.