Correlation Between Ethereum and UBEX

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

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

Diversification Opportunities for Ethereum and UBEX

-0.61

Correlation Coefficient

Ethereum  UBEX

Excellent diversification

The 3 months correlation between Ethereum and UBEX is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and UBEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBEX and Ethereum 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 are associated (or correlated) with UBEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBEX has no effect on the direction of Ethereum i.e., Ethereum and UBEX go up and down completely randomly.

Pair Corralation between Ethereum and UBEX

Assuming the 90 days trading horizon Ethereum is expected to generate 41.54 times less return on investment than UBEX. But when comparing it to its historical volatility, Ethereum is 23.47 times less risky than UBEX. It trades about 0.09 of its potential returns per unit of risk. UBEX is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.01  in UBEX on January 24, 2024 and sell it today you would lose  0.00  from holding UBEX or give up 36.0% of portfolio value over 90 days.

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

Ethereum  vs.  UBEX

Ethereum

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Ethereum exhibited solid returns over the last few months and may actually be approaching a breakup point.

UBEX

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UBEX are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UBEX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ethereum and UBEX

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

The idea behind Ethereum and UBEX 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.