Correlation Between Staked Ether and True USD

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

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

Diversification Opportunities for Staked Ether and True USD

0.12

Correlation Coefficient

Staked Ether  True USD

Average diversification

The 3 months correlation between Staked and True is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and True USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True USD 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 True USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True USD has no effect on the direction of Staked Ether i.e., Staked Ether and True USD go up and down completely randomly.

Pair Corralation between Staked Ether and True USD

Assuming the 90 days trading horizon Staked Ether is expected to generate 10.41 times more return on investment than True USD. However, Staked Ether is 10.41 times more volatile than True USD. It trades about 0.2 of its potential returns per unit of risk. True USD is currently generating about 0.0 per unit of risk. If you would invest  242,343  in Staked Ether on September 1, 2024 and sell it today you would earn a total of  128,242  from holding Staked Ether or generate 52.92% return on investment over 90 days.

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

Staked Ether  vs.  True USD

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.

True USD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Staked Ether and True USD

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

The idea behind Staked Ether and True USD 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.