Correlation Between Wrapped EETH and EOSDAC

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

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

Diversification Opportunities for Wrapped EETH and EOSDAC

0.91

Correlation Coefficient

Wrapped EETH  EOSDAC

Almost no diversification

The 3 months correlation between Wrapped and EOSDAC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wrapped eETH and EOSDAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOSDAC and Wrapped EETH 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 Wrapped eETH are associated (or correlated) with EOSDAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOSDAC has no effect on the direction of Wrapped EETH i.e., Wrapped EETH and EOSDAC go up and down completely randomly.

Pair Corralation between Wrapped EETH and EOSDAC

Assuming the 90 days trading horizon Wrapped eETH is expected to generate 1.19 times more return on investment than EOSDAC. However, Wrapped EETH is 1.19 times more volatile than EOSDAC. It trades about 0.28 of its potential returns per unit of risk. EOSDAC is currently generating about 0.21 per unit of risk. If you would invest  175,704  in Wrapped eETH on April 21, 2025 and sell it today you would earn a total of  209,211  from holding Wrapped eETH or generate 119.07% return on investment over 90 days.

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

Wrapped eETH  vs.  EOSDAC

Wrapped eETH

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wrapped eETH are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Wrapped EETH exhibited solid returns over the last few months and may actually be approaching a breakup point.

EOSDAC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EOSDAC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, EOSDAC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wrapped EETH and EOSDAC

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

The idea behind Wrapped eETH and EOSDAC 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.