Correlation Between Cosmos and Staked Ether

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

By analyzing existing cross correlation between Cosmos and Staked Ether, you can compare the effects of market volatilities on Cosmos and Staked Ether 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 Staked Ether. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and Staked Ether.

Diversification Opportunities for Cosmos and Staked Ether

0.35

Correlation Coefficient

Cosmos  Staked Ether

Weak diversification

The 3 months correlation between Cosmos and Staked is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether 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 Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of Cosmos i.e., Cosmos and Staked Ether go up and down completely randomly.

Pair Corralation between Cosmos and Staked Ether

Assuming the 90 days trading horizon Cosmos is expected to generate 3.9 times less return on investment than Staked Ether. But when comparing it to its historical volatility, Cosmos is 1.17 times less risky than Staked Ether. It trades about 0.08 of its potential returns per unit of risk. Staked Ether is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  175,599  in Staked Ether on April 21, 2025 and sell it today you would earn a total of  181,622  from holding Staked Ether or generate 103.43% return on investment over 90 days.

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

Cosmos  vs.  Staked Ether

Cosmos

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Cosmos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Staked Ether

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Staked Ether exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cosmos and Staked Ether

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

The idea behind Cosmos and Staked Ether 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.