Correlation Between Staked Ether and Aerodrome Finance

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

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

Diversification Opportunities for Staked Ether and Aerodrome Finance

0.65

Correlation Coefficient

Staked Ether  Aerodrome Finance

Poor diversification

The 3 months correlation between Staked and Aerodrome is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and Aerodrome Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerodrome Finance and Staked Ether 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 Staked Ether are associated (or correlated) with Aerodrome Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerodrome Finance has no effect on the direction of Staked Ether i.e., Staked Ether and Aerodrome Finance go up and down completely randomly.

Pair Corralation between Staked Ether and Aerodrome Finance

Assuming the 90 days trading horizon Staked Ether is expected to generate 2.39 times less return on investment than Aerodrome Finance. But when comparing it to its historical volatility, Staked Ether is 1.98 times less risky than Aerodrome Finance. It trades about 0.2 of its potential returns per unit of risk. Aerodrome Finance is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Aerodrome Finance on September 1, 2024 and sell it today you would earn a total of  87.00  from holding Aerodrome Finance or generate 158.18% return on investment over 90 days.

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

Staked Ether  vs.  Aerodrome Finance

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.

Aerodrome Finance

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aerodrome Finance are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Aerodrome Finance exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Staked Ether and Aerodrome Finance

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

The idea behind Staked Ether and Aerodrome Finance 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.