Correlation Between Cronos and Staked Ether

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

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

Diversification Opportunities for Cronos and Staked Ether

0.47

Correlation Coefficient

Cronos  Staked Ether

Very weak diversification

The 3 months correlation between Cronos and Staked is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cronos and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether and Cronos 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 Cronos are associated (or correlated) with Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of Cronos i.e., Cronos and Staked Ether go up and down completely randomly.

Pair Corralation between Cronos and Staked Ether

Assuming the 90 days trading horizon Cronos is expected to under-perform the Staked Ether. But the crypto coin apears to be less risky and, when comparing its historical volatility, Cronos is 1.12 times less risky than Staked Ether. The crypto coin trades about -0.06 of its potential returns per unit of risk. The Staked Ether is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  297,894  in Staked Ether on March 2, 2024 and sell it today you would earn a total of  76,681  from holding Staked Ether or generate 25.74% return on investment over 90 days.

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

Cronos  vs.  Staked Ether

Cronos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cronos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for Cronos shareholders.

Staked Ether

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Staked Ether may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Cronos and Staked Ether

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

The idea behind Cronos and Staked Ether 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.