diversifiable risk of combining Arbitrum and Staked Ether into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbitrum and Staked Ether, you can compare the effects of market volatilities on Arbitrum 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 Arbitrum with a short position of Staked Ether. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbitrum and Staked Ether.
Diversification Opportunities for Arbitrum and Staked Ether
Pair Corralation between Arbitrum and Staked Ether
Assuming the 90 days trading horizon Arbitrum is expected to generate 3.42 times less return on investment than Staked Ether. In addition to that, Arbitrum is 1.36 times more volatile than Staked Ether. It trades about 0.11 of its total potential returns per unit of risk. Staked Ether is currently generating about 0.52 per unit of volatility. If you would invest 223,279 in Staked Ether on November 24, 2023 and sell it today you would earn a total of 72,738 from holding Staked Ether or generate 32.58% return on investment over 90 days.
Arbitrum vs. Staked Ether
Arbitrum and Staked Ether Volatility Contrast
Pair Trading with Arbitrum and Staked EtherThe main advantage of trading using opposite Arbitrum and Staked Ether positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbitrum 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 Arbitrum 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.
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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