Correlation Between Ethena and Tether Gold

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

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

Diversification Opportunities for Ethena and Tether Gold

-0.35

Correlation Coefficient

Ethena  Tether Gold

Very good diversification

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

Pair Corralation between Ethena and Tether Gold

Assuming the 90 days trading horizon Ethena is expected to generate 6.86 times more return on investment than Tether Gold. However, Ethena is 6.86 times more volatile than Tether Gold. It trades about 0.08 of its potential returns per unit of risk. Tether Gold is currently generating about 0.02 per unit of risk. If you would invest  34.00  in Ethena on April 22, 2025 and sell it today you would earn a total of  9.00  from holding Ethena or generate 26.47% return on investment over 90 days.

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

Ethena  vs.  Tether Gold

Ethena

Risk-Adjusted Performance

Modest

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

Tether Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tether Gold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Tether Gold 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 Tether Gold

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

The idea behind Ethena and Tether Gold 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 CEOs Directory module to screen CEOs from public companies around the world.