Correlation Between Staked Ether and Ethereum

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

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

Diversification Opportunities for Staked Ether and Ethereum

1.0

Correlation Coefficient

Staked Ether  Ethereum

No risk reduction

The 3 months correlation between Staked and Ethereum is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum and Staked Ether 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 Staked Ether 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 Staked Ether i.e., Staked Ether and Ethereum go up and down completely randomly.

Pair Corralation between Staked Ether and Ethereum

Assuming the 90 days trading horizon Staked Ether is expected to generate 1.0 times less return on investment than Ethereum. But when comparing it to its historical volatility, Staked Ether is 1.0 times less risky than Ethereum. It trades about 0.26 of its potential returns per unit of risk. Ethereum is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  175,704  in Ethereum on April 20, 2025 and sell it today you would earn a total of  177,972  from holding Ethereum or generate 101.29% return on investment over 90 days.

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

Staked Ether  vs.  Ethereum

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.

Ethereum

Risk-Adjusted Performance

Solid

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

Pair Trading with Staked Ether and Ethereum

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

The idea behind Staked Ether 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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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.