Correlation Between Orbs and Ethereum

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

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

Diversification Opportunities for Orbs and Ethereum

0.87

Correlation Coefficient

Orbs  Ethereum

Very poor diversification

The 3 months correlation between Orbs and Ethereum is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Orbs and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum and Orbs 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 Orbs 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 Orbs i.e., Orbs and Ethereum go up and down completely randomly.

Pair Corralation between Orbs and Ethereum

Assuming the 90 days trading horizon Orbs is expected to under-perform the Ethereum. In addition to that, Orbs is 1.35 times more volatile than Ethereum. It trades about -0.17 of its total potential returns per unit of risk. Ethereum is currently generating about -0.15 per unit of volatility. If you would invest  331,224  in Ethereum on February 2, 2024 and sell it today you would lose (40,105) from holding Ethereum or give up 12.11% of portfolio value over 90 days.

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

Orbs  vs.  Ethereum

Orbs

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ethereum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 8 (%) 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 Orbs and Ethereum

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

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.