Correlation Between Ethereum PoW and Monero

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

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

Diversification Opportunities for Ethereum PoW and Monero

-0.42

Correlation Coefficient

Ethereum PoW  Monero

Very good diversification

The 3 months correlation between Ethereum and Monero is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum PoW and Monero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monero and Ethereum PoW 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 PoW are associated (or correlated) with Monero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monero has no effect on the direction of Ethereum PoW i.e., Ethereum PoW and Monero go up and down completely randomly.

Pair Corralation between Ethereum PoW and Monero

Assuming the 90 days trading horizon Ethereum PoW is expected to under-perform the Monero. In addition to that, Ethereum PoW is 1.97 times more volatile than Monero. It trades about -0.16 of its total potential returns per unit of risk. Monero is currently generating about 0.07 per unit of volatility. If you would invest  19,320  in Monero on December 30, 2024 and sell it today you would earn a total of  2,280  from holding Monero or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ethereum PoW  vs.  Monero

Ethereum PoW

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethereum PoW 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 Ethereum PoW shareholders.

Monero

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monero are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Monero exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum PoW and Monero

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

The idea behind Ethereum PoW and Monero 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.