Correlation Between Staked Ether and Terra

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

Diversification Opportunities for Staked Ether and Terra

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Staked and Terra is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and Terra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terra and Staked Ether 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 Staked Ether are associated (or correlated) with Terra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terra has no effect on the direction of Staked Ether i.e., Staked Ether and Terra go up and down completely randomly.

Pair Corralation between Staked Ether and Terra

Assuming the 90 days trading horizon Staked Ether is expected to under-perform the Terra. But the crypto coin apears to be less risky and, when comparing its historical volatility, Staked Ether is 12.64 times less risky than Terra. The crypto coin trades about -0.06 of its potential returns per unit of risk. The Terra is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,096  in Terra on September 9, 2022 and sell it today you would lose (3,939)  from holding Terra or give up 96.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy22.3%
ValuesDaily Returns

Staked Ether  vs.  Terra

 Performance (%) 
       Timeline  
Staked Ether 
Staked Performance
0 of 100
Over the last 90 days Staked Ether 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 January 2023. The current disturbance may also be a sign of long term up-swing for Staked Ether investors.

Staked Price Channel

Terra 
Terra Performance
0 of 100
Over the last 90 days Terra 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 January 2023. The current disturbance may also be a sign of long term up-swing for Terra investors.

Terra Price Channel

Staked Ether and Terra Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Staked Ether and Terra

The main advantage of trading using opposite Staked Ether and Terra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Staked Ether position performs unexpectedly, Terra 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 Terra will offset losses from the drop in Terra's long position.
Staked Ether vs. XRP
Staked Ether vs. Polygon
Staked Ether vs. Solana
Staked Ether vs. Chainlink
The idea behind Staked Ether and Terra 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.
Terra vs. XRP
Terra vs. Polygon
Terra vs. Solana
Terra vs. Chainlink
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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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