Correlation Between Staked Ether and SENT

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

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

Diversification Opportunities for Staked Ether and SENT

0.91

Correlation Coefficient

Staked Ether  SENT

Almost no diversification

The 3 months correlation between Staked and SENT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and SENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENT 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 SENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENT has no effect on the direction of Staked Ether i.e., Staked Ether and SENT go up and down completely randomly.

Pair Corralation between Staked Ether and SENT

Assuming the 90 days trading horizon Staked Ether is expected to generate 2.24 times less return on investment than SENT. But when comparing it to its historical volatility, Staked Ether is 4.31 times less risky than SENT. It trades about 0.2 of its potential returns per unit of risk. SENT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.12  in SENT on September 1, 2024 and sell it today you would earn a total of  0.04  from holding SENT or generate 33.57% return on investment over 90 days.

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

Staked Ether  vs.  SENT

Staked Ether

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 15 (%) 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.

SENT

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SENT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Staked Ether and SENT

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

The idea behind Staked Ether and SENT 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.