Correlation Between Etherfi and SUN

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

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

Diversification Opportunities for Etherfi and SUN

-0.11

Correlation Coefficient

Etherfi  SUN

Good diversification

The 3 months correlation between Etherfi and SUN is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Etherfi and SUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUN and Etherfi 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 Etherfi are associated (or correlated) with SUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUN has no effect on the direction of Etherfi i.e., Etherfi and SUN go up and down completely randomly.

Pair Corralation between Etherfi and SUN

Assuming the 90 days trading horizon Etherfi is expected to generate 1.28 times more return on investment than SUN. However, Etherfi is 1.28 times more volatile than SUN. It trades about 0.18 of its potential returns per unit of risk. SUN is currently generating about -0.01 per unit of risk. If you would invest  127.00  in Etherfi on September 3, 2024 and sell it today you would earn a total of  133.00  from holding Etherfi or generate 104.72% return on investment over 90 days.

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

Etherfi  vs.  SUN

Etherfi

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Etherfi are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Etherfi exhibited solid returns over the last few months and may actually be approaching a breakup point.

SUN

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Etherfi and SUN

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

The idea behind Etherfi and SUN 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.