Correlation Between Ethereum and Cosmos

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Can any of the company-specific risk be diversified away by investing in both Ethereum and Cosmos 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 Ethereum and Cosmos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Cosmos, you can compare the effects of market volatilities on Ethereum and Cosmos 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 Ethereum with a short position of Cosmos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Cosmos.

Diversification Opportunities for Ethereum and Cosmos

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ethereum and Cosmos is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Cosmos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos and Ethereum 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 Ethereum are associated (or correlated) with Cosmos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos has no effect on the direction of Ethereum i.e., Ethereum and Cosmos go up and down completely randomly.

Pair Corralation between Ethereum and Cosmos

Assuming the 90 days trading horizon Ethereum is expected to under-perform the Cosmos. But the crypto coin apears to be less risky and, when comparing its historical volatility, Ethereum is 1.22 times less risky than Cosmos. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Cosmos is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  924.00  in Cosmos on September 1, 2022 and sell it today you would earn a total of  104.00  from holding Cosmos or generate 11.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ethereum  vs.  Cosmos

 Performance (%) 
       Timeline  
Ethereum 
Ethereum Performance
0 of 100
Over the last 90 days Ethereum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for Ethereum investors.

Ethereum Price Channel

Cosmos 
Cosmos Performance
0 of 100
Over the last 90 days Cosmos has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cosmos is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cosmos Price Channel

Ethereum and Cosmos Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ethereum and Cosmos

The main advantage of trading using opposite Ethereum and Cosmos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Cosmos 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 Cosmos will offset losses from the drop in Cosmos' long position.
Ethereum vs. Cardano
Ethereum vs. Avalanche
Ethereum vs. Cosmos
Ethereum vs. Cronos
The idea behind Ethereum and Cosmos 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.
Cosmos vs. Ethereum
Cosmos vs. XRP
Cosmos vs. Solana
Cosmos vs. Cardano
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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