Correlation Between Etherfi and TLOS

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

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

Diversification Opportunities for Etherfi and TLOS

-0.27

Correlation Coefficient

Etherfi  TLOS

Very good diversification

The 3 months correlation between Etherfi and TLOS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Etherfi and TLOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TLOS 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 TLOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TLOS has no effect on the direction of Etherfi i.e., Etherfi and TLOS go up and down completely randomly.

Pair Corralation between Etherfi and TLOS

Assuming the 90 days trading horizon Etherfi is expected to generate 1.43 times more return on investment than TLOS. However, Etherfi is 1.43 times more volatile than TLOS. It trades about 0.18 of its potential returns per unit of risk. TLOS is currently generating about -0.02 per unit of risk. If you would invest  125.00  in Etherfi on September 2, 2024 and sell it today you would earn a total of  131.00  from holding Etherfi or generate 104.8% return on investment over 90 days.

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

Etherfi  vs.  TLOS

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.

TLOS

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Etherfi and TLOS 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 Commodity Directory module to find actively traded commodities issued by global exchanges.