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, 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

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Ethereum and Nasdaq-100 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Nasdaq-100 Index 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

If you would invest (100.00)  in Nasdaq-100 Index on September 1, 2022 and sell it today you would earn a total of  100.00  from holding Nasdaq-100 Index or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Ethereum  vs.  Nasdaq-100 Index

 Performance (%) 
       Timeline  
Ethereum 
Ethereum Performance
0 of 100
Over the last 90 days Ethereum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Ethereum investors.

Ethereum Price Channel

Nasdaq-100 Index 
Nasdaq-100 Performance
0 of 100
Over the last 90 days Nasdaq-100 Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Nasdaq-100 Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.
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The idea behind Ethereum and Nasdaq-100 Index 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Nasdaq-100 Index as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Nasdaq-100 Index's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Nasdaq-100 Index's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Nasdaq-100 Index.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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