Correlation Between Ethereum Name and PayProtocol Paycoin

Can any of the company-specific risk be diversified away by investing in both Ethereum Name and PayProtocol Paycoin 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 PayProtocol Paycoin 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 PayProtocol Paycoin, you can compare the effects of market volatilities on Ethereum Name and PayProtocol Paycoin 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 PayProtocol Paycoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum Name and PayProtocol Paycoin.

Diversification Opportunities for Ethereum Name and PayProtocol Paycoin

-0.29

Correlation Coefficient

Ethereum Name  PayProtocol Paycoin

Very good diversification

The 3 months correlation between Ethereum and PayProtocol is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum Name Service and PayProtocol Paycoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayProtocol Paycoin 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 PayProtocol Paycoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayProtocol Paycoin has no effect on the direction of Ethereum Name i.e., Ethereum Name and PayProtocol Paycoin go up and down completely randomly.

Pair Corralation between Ethereum Name and PayProtocol Paycoin

Assuming the 90 days trading horizon Ethereum Name Service is expected to under-perform the PayProtocol Paycoin. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ethereum Name Service is 1.8 times less risky than PayProtocol Paycoin. The crypto coin trades about -0.24 of its potential returns per unit of risk. The PayProtocol Paycoin is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  14.00  in PayProtocol Paycoin on January 20, 2024 and sell it today you would earn a total of  5.00  from holding PayProtocol Paycoin or generate 35.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ethereum Name Service  vs.  PayProtocol Paycoin

Ethereum Name Service

Risk-Adjusted Performance

0 of 100

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.

PayProtocol Paycoin

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PayProtocol Paycoin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, PayProtocol Paycoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum Name and PayProtocol Paycoin

The main advantage of trading using opposite Ethereum Name and PayProtocol Paycoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum Name position performs unexpectedly, PayProtocol Paycoin 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 PayProtocol Paycoin will offset losses from the drop in PayProtocol Paycoin's long position.

The idea behind Ethereum Name Service and PayProtocol Paycoin 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.