Correlation Between Arbitrum and Staked Ether

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Can any of the company-specific risk be diversified away by investing in both Arbitrum 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 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

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Arbitrum and Staked is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Arbitrum and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether and Arbitrum 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 Arbitrum 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 Arbitrum i.e., Arbitrum and Staked Ether go up and down completely randomly.

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.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Arbitrum  vs.  Staked Ether

 Performance 
       Timeline  
Arbitrum 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Arbitrum are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Arbitrum exhibited solid returns over the last few months and may actually be approaching a breakup point.
Staked Ether 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Staked Ether exhibited solid returns over the last few months and may actually be approaching a breakup point.

Arbitrum and Staked Ether Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arbitrum and Staked Ether

The 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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