Correlation Between EMC2 and Staked Ether

Can any of the company-specific risk be diversified away by investing in both EMC2 and Staked Ether 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 EMC2 and Staked Ether into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EMC2 and Staked Ether, you can compare the effects of market volatilities on EMC2 and Staked Ether 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 EMC2 with a short position of Staked Ether. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMC2 and Staked Ether.

Diversification Opportunities for EMC2 and Staked Ether

0.95

Correlation Coefficient

EMC2  Staked Ether

Almost no diversification

The 3 months correlation between EMC2 and Staked is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding EMC2 and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether and EMC2 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 EMC2 are associated (or correlated) with Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of EMC2 i.e., EMC2 and Staked Ether go up and down completely randomly.

Pair Corralation between EMC2 and Staked Ether

Assuming the 90 days trading horizon EMC2 is expected to generate 0.9 times more return on investment than Staked Ether. However, EMC2 is 1.11 times less risky than Staked Ether. It trades about 0.25 of its potential returns per unit of risk. Staked Ether is currently generating about 0.19 per unit of risk. If you would invest  0.03  in EMC2 on September 2, 2024 and sell it today you would earn a total of  0.02  from holding EMC2 or generate 67.94% return on investment over 90 days.

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

EMC2  vs.  Staked Ether

EMC2

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EMC2 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, EMC2 exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with EMC2 and Staked Ether

The main advantage of trading using opposite EMC2 and Staked Ether positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMC2 position performs unexpectedly, Staked Ether 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 Staked Ether will offset losses from the drop in Staked Ether's long position.

The idea behind EMC2 and Staked Ether 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..