Correlation Between Staked Ether and RDN

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

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

Diversification Opportunities for Staked Ether and RDN

0.46

Correlation Coefficient

Staked Ether  RDN

Very weak diversification

The 3 months correlation between Staked and RDN is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and RDN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RDN 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 RDN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RDN has no effect on the direction of Staked Ether i.e., Staked Ether and RDN go up and down completely randomly.

Pair Corralation between Staked Ether and RDN

Assuming the 90 days trading horizon Staked Ether is expected to generate 6.33 times less return on investment than RDN. But when comparing it to its historical volatility, Staked Ether is 8.67 times less risky than RDN. It trades about 0.06 of its potential returns per unit of risk. RDN is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2.62  in RDN on October 10, 2024 and sell it today you would lose (2.15) from holding RDN or give up 82.15% of portfolio value over 90 days.

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

Staked Ether  vs.  RDN

Staked Ether

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Staked Ether exhibited solid returns over the last few months and may actually be approaching a breakup point.

RDN

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RDN are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, RDN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Staked Ether and RDN

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

The idea behind Staked Ether and RDN 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.