Correlation Between UBEX and Ethereum

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

Diversification Opportunities for UBEX and Ethereum

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between UBEX and Ethereum is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding UBEX and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum and UBEX 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 UBEX are associated (or correlated) with Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum has no effect on the direction of UBEX i.e., UBEX and Ethereum go up and down completely randomly.

Pair Corralation between UBEX and Ethereum

Assuming the 90 days trading horizon UBEX is expected to generate 15.8 times more return on investment than Ethereum. However, UBEX is 15.8 times more volatile than Ethereum. It trades about 0.18 of its potential returns per unit of risk. Ethereum is currently generating about 0.42 per unit of risk. If you would invest  0.00  in UBEX on November 4, 2022 and sell it today you would lose  0.00  from holding UBEX or give up 13.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

UBEX  vs.  Ethereum

 Performance (%) 
       Timeline  
UBEX 
UBEX Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in UBEX are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, UBEX sustained solid returns over the last few months and may actually be approaching a breakup point.

UBEX Price Channel

Ethereum 
Ethereum Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ethereum may actually be approaching a critical reversion point that can send shares even higher in March 2023.

Ethereum Price Channel

UBEX and Ethereum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UBEX and Ethereum

The main advantage of trading using opposite UBEX and Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBEX position performs unexpectedly, Ethereum 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 Ethereum will offset losses from the drop in Ethereum's long position.
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The idea behind UBEX and Ethereum 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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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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