Correlation Between Virtual Protocol and WETH

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

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

Diversification Opportunities for Virtual Protocol and WETH

-0.17

Correlation Coefficient

Virtual Protocol  WETH

Good diversification

The 3 months correlation between Virtual and WETH is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Virtual Protocol and WETH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WETH and Virtual Protocol 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 Virtual Protocol are associated (or correlated) with WETH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WETH has no effect on the direction of Virtual Protocol i.e., Virtual Protocol and WETH go up and down completely randomly.

Pair Corralation between Virtual Protocol and WETH

Assuming the 90 days trading horizon Virtual Protocol is expected to generate 227.29 times more return on investment than WETH. However, Virtual Protocol is 227.29 times more volatile than WETH. It trades about 0.02 of its potential returns per unit of risk. WETH is currently generating about 0.0 per unit of risk. If you would invest  149.00  in Virtual Protocol on May 4, 2025 and sell it today you would lose (23.00) from holding Virtual Protocol or give up 15.44% of portfolio value over 90 days.

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

Virtual Protocol  vs.  WETH

Virtual Protocol

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtual Protocol are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Virtual Protocol may actually be approaching a critical reversion point that can send shares even higher in September 2025.

WETH

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Virtual Protocol and WETH

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

The idea behind Virtual Protocol and WETH 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.