Correlation Between Cosmos and Ethereum Classic

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

Diversification Opportunities for Cosmos and Ethereum Classic

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Cosmos and Ethereum is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and Ethereum Classic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum Classic and Cosmos 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 Cosmos are associated (or correlated) with Ethereum Classic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum Classic has no effect on the direction of Cosmos i.e., Cosmos and Ethereum Classic go up and down completely randomly.

Pair Corralation between Cosmos and Ethereum Classic

Assuming the 90 days trading horizon Cosmos is expected to under-perform the Ethereum Classic. But the crypto coin apears to be less risky and, when comparing its historical volatility, Cosmos is 1.08 times less risky than Ethereum Classic. The crypto coin trades about 0.0 of its potential returns per unit of risk. The Ethereum Classic is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,196  in Ethereum Classic on December 29, 2023 and sell it today you would lose (939.00) from holding Ethereum Classic or give up 22.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Cosmos  vs.  Ethereum Classic

 Performance 
       Timeline  
Cosmos 

Risk-Adjusted Performance

5 of 100

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

Risk-Adjusted Performance

10 of 100

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

Cosmos and Ethereum Classic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cosmos and Ethereum Classic

The main advantage of trading using opposite Cosmos and Ethereum Classic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos position performs unexpectedly, Ethereum Classic 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 Classic will offset losses from the drop in Ethereum Classic's long position.
The idea behind Cosmos and Ethereum Classic 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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