Correlation Between Tech Leaders and Ether Fund

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

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

Diversification Opportunities for Tech Leaders and Ether Fund

0.89

Correlation Coefficient

Tech Leaders  Ether Fund

Very poor diversification

The 3 months correlation between Tech and Ether is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Tech Leaders Income and Ether Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ether Fund and Tech Leaders 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 Tech Leaders Income are associated (or correlated) with Ether Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ether Fund has no effect on the direction of Tech Leaders i.e., Tech Leaders and Ether Fund go up and down completely randomly.

Pair Corralation between Tech Leaders and Ether Fund

Assuming the 90 days trading horizon Tech Leaders is expected to generate 6.54 times less return on investment than Ether Fund. But when comparing it to its historical volatility, Tech Leaders Income is 3.77 times less risky than Ether Fund. It trades about 0.01 of its potential returns per unit of risk. Ether Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,525  in Ether Fund on September 24, 2024 and sell it today you would lose (10.00) from holding Ether Fund or give up 0.13% of portfolio value over 90 days.

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

Tech Leaders Income  vs.  Ether Fund

Tech Leaders Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tech Leaders Income are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Tech Leaders is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ether Fund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ether Fund are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Ether Fund displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tech Leaders and Ether Fund

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

The idea behind Tech Leaders Income and Ether Fund 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.