Correlation Between Staked Ether and Ethena

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

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

Diversification Opportunities for Staked Ether and Ethena

0.96

Correlation Coefficient

Staked Ether  Ethena

Almost no diversification

The 3 months correlation between Staked and Ethena is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and Ethena in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethena 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 Ethena. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethena has no effect on the direction of Staked Ether i.e., Staked Ether and Ethena go up and down completely randomly.

Pair Corralation between Staked Ether and Ethena

Assuming the 90 days trading horizon Staked Ether is expected to generate 3.45 times less return on investment than Ethena. But when comparing it to its historical volatility, Staked Ether is 2.59 times less risky than Ethena. It trades about 0.2 of its potential returns per unit of risk. Ethena is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Ethena on September 1, 2024 and sell it today you would earn a total of  62.00  from holding Ethena or generate 281.82% return on investment over 90 days.

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

Staked Ether  vs.  Ethena

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.

Ethena

Risk-Adjusted Performance

20 of 100

Solid

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

Pair Trading with Staked Ether and Ethena

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

The idea behind Staked Ether and Ethena 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.