Correlation Between Ethereum and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Ethereum and Nasdaq 100 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 Ethereum and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Ethereum and Nasdaq 100 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 Ethereum with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Nasdaq 100.
Diversification Opportunities for Ethereum and Nasdaq 100
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ethereum and Nasdaq is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index and Ethereum 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 Ethereum are associated (or correlated) with Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Index has no effect on the direction of Ethereum i.e., Ethereum and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Ethereum and Nasdaq 100
Assuming the 90 days trading horizon Ethereum is expected to under-perform the Nasdaq 100. In addition to that, Ethereum is 3.25 times more volatile than Nasdaq 100 Index Fund. It trades about -0.14 of its total potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about -0.29 per unit of volatility. If you would invest 3,518 in Nasdaq 100 Index Fund on January 24, 2024 and sell it today you would lose (206.00) from holding Nasdaq 100 Index Fund or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ethereum vs. Nasdaq 100 Index Fund
Performance |
| Timeline |
| Ethereum |
| Nasdaq 100 Index |
Ethereum and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ethereum and Nasdaq 100
The main advantage of trading using opposite Ethereum and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.The idea behind Ethereum and Nasdaq 100 Index Fund 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.| Nasdaq 100 vs. Shelton Emerging Markets | Nasdaq 100 vs. Shelton Emerging Markets | Nasdaq 100 vs. California Tax Free Income | Nasdaq 100 vs. Shelton E Value |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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