Correlation Between EXP and Ethereum

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

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

Diversification Opportunities for EXP and Ethereum

0.65

Correlation Coefficient

EXP  Ethereum

Poor diversification

The 3 months correlation between EXP and Ethereum is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding EXP and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum and EXP 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 EXP 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 EXP i.e., EXP and Ethereum go up and down completely randomly.

Pair Corralation between EXP and Ethereum

Assuming the 90 days trading horizon EXP is expected to generate 0.65 times more return on investment than Ethereum. However, EXP is 1.53 times less risky than Ethereum. It trades about 0.01 of its potential returns per unit of risk. Ethereum is currently generating about -0.11 per unit of risk. If you would invest  0.04  in EXP on February 3, 2025 and sell it today you would lose  0.00  from holding EXP or give up 1.79% of portfolio value over 90 days.

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

EXP  vs.  Ethereum

EXP

Risk-Adjusted Performance

Very Weak

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

Ethereum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ethereum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for Ethereum shareholders.

Pair Trading with EXP and Ethereum

The main advantage of trading using opposite EXP and Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXP 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 EXP 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.