Correlation Between ARK and Staked Ether

Can any of the company-specific risk be diversified away by investing in both ARK 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 ARK and Staked Ether into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARK and Staked Ether, you can compare the effects of market volatilities on ARK 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 ARK with a short position of Staked Ether. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARK and Staked Ether.

Diversification Opportunities for ARK and Staked Ether

0.67

Correlation Coefficient

ARK  Staked Ether

Poor diversification

The 3 months correlation between ARK and Staked is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding ARK and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether and ARK 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 ARK 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 ARK i.e., ARK and Staked Ether go up and down completely randomly.

Pair Corralation between ARK and Staked Ether

Assuming the 90 days trading horizon ARK is expected to generate 1.94 times more return on investment than Staked Ether. However, ARK is 1.94 times more volatile than Staked Ether. It trades about 0.05 of its potential returns per unit of risk. Staked Ether is currently generating about 0.08 per unit of risk. If you would invest  39.00  in ARK on March 2, 2024 and sell it today you would earn a total of  41.00  from holding ARK or generate 105.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.81%
Values	Daily Returns

ARK  vs.  Staked Ether

ARK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for ARK shareholders.

Staked Ether

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Staked Ether may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with ARK and Staked Ether

The main advantage of trading using opposite ARK and Staked Ether positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARK 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 ARK 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.