Correlation Between Uniswap Protocol and Ethereum

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

Diversification Opportunities for Uniswap Protocol and Ethereum

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Uniswap and Ethereum is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Uniswap Protocol Token and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum and Uniswap Protocol 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 Uniswap Protocol Token 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 Uniswap Protocol i.e., Uniswap Protocol and Ethereum go up and down completely randomly.

Pair Corralation between Uniswap Protocol and Ethereum

Assuming the 90 days trading horizon Uniswap Protocol Token is expected to generate 1.07 times more return on investment than Ethereum. However, Uniswap Protocol is 1.07 times more volatile than Ethereum. It trades about 0.06 of its potential returns per unit of risk. Ethereum is currently generating about -0.14 per unit of risk. If you would invest  617.00  in Uniswap Protocol Token on July 6, 2022 and sell it today you would earn a total of  23.00  from holding Uniswap Protocol Token or generate 3.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy90.48%
ValuesDaily Returns

Uniswap Protocol Token  vs.  Ethereum

 Performance (%) 
       Timeline  
Uniswap Protocol Token 
Uniswap Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Uniswap Protocol Token are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Uniswap Protocol sustained solid returns over the last few months and may actually be approaching a breakup point.

Uniswap Price Channel

Ethereum 
Ethereum Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

Ethereum Price Channel

Uniswap Protocol and Ethereum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Uniswap Protocol and Ethereum

The main advantage of trading using opposite Uniswap Protocol and Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniswap Protocol 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 Uniswap Protocol Token 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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