Correlation Between Ethereum and Storj

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

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

Diversification Opportunities for Ethereum and Storj

0.64

Correlation Coefficient

Ethereum  Storj

Poor diversification

The 3 months correlation between Ethereum and Storj is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Storj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storj and Ethereum 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 Ethereum are associated (or correlated) with Storj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storj has no effect on the direction of Ethereum i.e., Ethereum and Storj go up and down completely randomly.

Pair Corralation between Ethereum and Storj

Assuming the 90 days trading horizon Ethereum is expected to generate 1.62 times less return on investment than Storj. But when comparing it to its historical volatility, Ethereum is 1.8 times less risky than Storj. It trades about 0.18 of its potential returns per unit of risk. Storj is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Storj on August 30, 2024 and sell it today you would earn a total of  26.00  from holding Storj or generate 72.22% return on investment over 90 days.

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

Ethereum  vs.  Storj

Ethereum

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Storj

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Storj are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Storj exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum and Storj

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

The idea behind Ethereum and Storj 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.