Correlation Between Ethena and WAN

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

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

Diversification Opportunities for Ethena and WAN

0.61

Correlation Coefficient

Ethena  WAN

Poor diversification

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

Pair Corralation between Ethena and WAN

Assuming the 90 days trading horizon Ethena is expected to under-perform the WAN. In addition to that, Ethena is 1.68 times more volatile than WAN. It trades about -0.03 of its total potential returns per unit of risk. WAN is currently generating about 0.0 per unit of volatility. If you would invest  12.00  in WAN on March 22, 2025 and sell it today you would lose (1.00) from holding WAN or give up 8.33% of portfolio value over 90 days.

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

Ethena  vs.  WAN

Ethena

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethena has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for Ethena shareholders.

WAN

Risk-Adjusted Performance

Very Weak

Over the last 90 days WAN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WAN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ethena and WAN

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

The idea behind Ethena and WAN 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.