Correlation Between Ethereum Name and Cronos

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Can any of the company-specific risk be diversified away by investing in both Ethereum Name and Cronos 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 Name and Cronos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum Name Service and Cronos, you can compare the effects of market volatilities on Ethereum Name and Cronos 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 Name with a short position of Cronos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum Name and Cronos.

Diversification Opportunities for Ethereum Name and Cronos

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ethereum and Cronos is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum Name Service and Cronos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cronos and Ethereum Name 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 Name Service are associated (or correlated) with Cronos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cronos has no effect on the direction of Ethereum Name i.e., Ethereum Name and Cronos go up and down completely randomly.

Pair Corralation between Ethereum Name and Cronos

Assuming the 90 days trading horizon Ethereum Name Service is expected to generate 1.27 times more return on investment than Cronos. However, Ethereum Name is 1.27 times more volatile than Cronos. It trades about 0.05 of its potential returns per unit of risk. Cronos is currently generating about 0.03 per unit of risk. If you would invest  930.00  in Ethereum Name Service on January 25, 2024 and sell it today you would earn a total of  611.00  from holding Ethereum Name Service or generate 65.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.79%
ValuesDaily Returns

Ethereum Name Service  vs.  Cronos

 Performance 
       Timeline  
Ethereum Name Service 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ethereum Name Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Ethereum Name Service shareholders.
Cronos 

Risk-Adjusted Performance

12 of 100

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

Ethereum Name and Cronos Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ethereum Name and Cronos

The main advantage of trading using opposite Ethereum Name and Cronos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum Name position performs unexpectedly, Cronos 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 Cronos will offset losses from the drop in Cronos' long position.
The idea behind Ethereum Name Service and Cronos 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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