Correlation Between RFR and Staked Ether

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

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

Diversification Opportunities for RFR and Staked Ether

0.17

Correlation Coefficient

RFR  Staked Ether

Average diversification

The 3 months correlation between RFR and Staked is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding RFR and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether and RFR 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 RFR are associated (or correlated) with Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of RFR i.e., RFR and Staked Ether go up and down completely randomly.

Pair Corralation between RFR and Staked Ether

Assuming the 90 days trading horizon RFR is expected to generate 3.31 times more return on investment than Staked Ether. However, RFR is 3.31 times more volatile than Staked Ether. It trades about -0.01 of its potential returns per unit of risk. Staked Ether is currently generating about -0.21 per unit of risk. If you would invest  0.00  in RFR on December 29, 2024 and sell it today you would lose  0.00  from holding RFR or give up 50.0% of portfolio value over 90 days.

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

RFR  vs.  Staked Ether

RFR

Risk-Adjusted Performance

Very Weak

Over the last 90 days RFR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for RFR shareholders.

Staked Ether

Risk-Adjusted Performance

Very Weak

Over the last 90 days Staked Ether 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 Staked Ether shareholders.

Pair Trading with RFR and Staked Ether

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

The idea behind RFR and Staked Ether 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.