Correlation Between Ether Fund and IShares SPTSX

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

By analyzing existing cross correlation between Ether Fund and iShares SPTSX 60, you can compare the effects of market volatilities on Ether Fund and IShares SPTSX 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 Ether Fund with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ether Fund and IShares SPTSX.

Diversification Opportunities for Ether Fund and IShares SPTSX

0.73

Correlation Coefficient

Ether Fund  IShares SPTSX

Poor diversification

The 3 months correlation between Ether and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ether Fund and iShares SPTSX 60 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX 60 and Ether Fund 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 Ether Fund are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX 60 has no effect on the direction of Ether Fund i.e., Ether Fund and IShares SPTSX go up and down completely randomly.

Pair Corralation between Ether Fund and IShares SPTSX

Assuming the 90 days trading horizon Ether Fund is expected to generate 24.37 times more return on investment than IShares SPTSX. However, Ether Fund is 24.37 times more volatile than iShares SPTSX 60. It trades about 0.06 of its potential returns per unit of risk. iShares SPTSX 60 is currently generating about 0.18 per unit of risk. If you would invest  7,015  in Ether Fund on September 26, 2024 and sell it today you would lose (1,668) from holding Ether Fund or give up 23.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Ether Fund  vs.  iShares SPTSX 60

Ether Fund

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ether Fund are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Ether Fund sustained solid returns over the last few months and may actually be approaching a breakup point.

iShares SPTSX 60

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX 60 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ether Fund and IShares SPTSX

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

The idea behind Ether Fund and iShares SPTSX 60 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.