Correlation Between Staked Ether and ZkSync

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

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

Diversification Opportunities for Staked Ether and ZkSync

0.94

Correlation Coefficient

Staked Ether  ZkSync

Almost no diversification

The 3 months correlation between Staked and ZkSync is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and zkSync in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on zkSync 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 ZkSync. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of zkSync has no effect on the direction of Staked Ether i.e., Staked Ether and ZkSync go up and down completely randomly.

Pair Corralation between Staked Ether and ZkSync

Assuming the 90 days trading horizon Staked Ether is expected to under-perform the ZkSync. But the crypto coin apears to be less risky and, when comparing its historical volatility, Staked Ether is 1.91 times less risky than ZkSync. The crypto coin trades about -0.03 of its potential returns per unit of risk. The zkSync is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13.00  in zkSync on November 19, 2024 and sell it today you would lose (2.00) from holding zkSync or give up 15.38% of portfolio value over 90 days.

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

Staked Ether  vs.  zkSync

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 latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Staked Ether shareholders.

zkSync

Risk-Adjusted Performance

Very Weak

Over the last 90 days zkSync has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ZkSync 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 ZkSync

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

The idea behind Staked Ether and zkSync 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.