Correlation Between Staked Ether and Optimism

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

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

Diversification Opportunities for Staked Ether and Optimism

-0.07

Correlation Coefficient

Staked Ether  Optimism

Good diversification

The 3 months correlation between Staked and Optimism is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism 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 Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of Staked Ether i.e., Staked Ether and Optimism go up and down completely randomly.

Pair Corralation between Staked Ether and Optimism

Assuming the 90 days trading horizon Staked Ether is expected to generate 0.73 times more return on investment than Optimism. However, Staked Ether is 1.37 times less risky than Optimism. It trades about 0.19 of its potential returns per unit of risk. Optimism is currently generating about 0.01 per unit of risk. If you would invest  147,083  in Staked Ether on April 7, 2025 and sell it today you would earn a total of  104,849  from holding Staked Ether or generate 71.29% return on investment over 90 days.

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

Staked Ether  vs.  Optimism

Staked Ether

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 15 (%) 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.

Optimism

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Staked Ether and Optimism

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

The idea behind Staked Ether and Optimism 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.