Correlation Between Staked Ether and SNM

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

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

Diversification Opportunities for Staked Ether and SNM

-0.73

Correlation Coefficient

Staked Ether  SNM

Pay attention - limited upside

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

Pair Corralation between Staked Ether and SNM

Assuming the 90 days trading horizon Staked Ether is expected to generate 0.6 times more return on investment than SNM. However, Staked Ether is 1.66 times less risky than SNM. It trades about 0.42 of its potential returns per unit of risk. SNM is currently generating about -0.04 per unit of risk. If you would invest  250,939  in Staked Ether on September 1, 2024 and sell it today you would earn a total of  119,646  from holding Staked Ether or generate 47.68% return on investment over 90 days.

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

Staked Ether  vs.  SNM

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.

SNM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, SNM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Staked Ether and SNM

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

The idea behind Staked Ether and SNM 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.