Correlation Between Staked Ether and STEPN

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

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

Diversification Opportunities for Staked Ether and STEPN

0.75

Correlation Coefficient

Staked Ether  STEPN

Poor diversification

The 3 months correlation between Staked and STEPN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and STEPN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEPN and Staked Ether 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 Staked Ether are associated (or correlated) with STEPN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEPN has no effect on the direction of Staked Ether i.e., Staked Ether and STEPN go up and down completely randomly.

Pair Corralation between Staked Ether and STEPN

Assuming the 90 days trading horizon Staked Ether is expected to generate 0.68 times more return on investment than STEPN. However, Staked Ether is 1.48 times less risky than STEPN. It trades about -0.21 of its potential returns per unit of risk. STEPN is currently generating about -0.26 per unit of risk. If you would invest  332,948  in Staked Ether on December 30, 2024 and sell it today you would lose (151,215) from holding Staked Ether or give up 45.42% of portfolio value over 90 days.

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

Staked Ether  vs.  STEPN

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.

STEPN

Risk-Adjusted Performance

Very Weak

Over the last 90 days STEPN 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 basic 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 STEPN shareholders.

Pair Trading with Staked Ether and STEPN

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

The idea behind Staked Ether and STEPN 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.