Correlation Between Ethereum and Nasdaq-100 Index

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Can any of the company-specific risk be diversified away by investing in both Ethereum and Nasdaq-100 Index 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 Index 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 Index 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 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Nasdaq-100 Index.

Diversification Opportunities for Ethereum and Nasdaq-100 Index

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ethereum and Nasdaq-100 is 0.75. 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 Index. 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 Index go up and down completely randomly.

Pair Corralation between Ethereum and Nasdaq-100 Index

Assuming the 90 days trading horizon Ethereum is expected to generate 10.09 times more return on investment than Nasdaq-100 Index. However, Ethereum is 10.09 times more volatile than Nasdaq 100 Index Fund. It trades about 0.09 of its potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.14 per unit of risk. If you would invest  187,162  in Ethereum on March 26, 2024 and sell it today you would earn a total of  162,263  from holding Ethereum or generate 86.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy34.09%
ValuesDaily Returns

Ethereum  vs.  Nasdaq 100 Index Fund

 Performance 
       Timeline  
Ethereum 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ethereum 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 technical 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 Ethereum shareholders.
Nasdaq 100 Index 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile forward-looking signals, Nasdaq-100 Index may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Ethereum and Nasdaq-100 Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ethereum and Nasdaq-100 Index

The main advantage of trading using opposite Ethereum and Nasdaq-100 Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Nasdaq-100 Index 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 Index will offset losses from the drop in Nasdaq-100 Index'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.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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