Correlation Between Ethereum and Arweave

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ethereum and Arweave 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 Arweave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ethereum and Arweave, you can compare the effects of market volatilities on Ethereum and Arweave 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 Arweave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ethereum and Arweave.

Diversification Opportunities for Ethereum and Arweave

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Ethereum and Arweave is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ethereum and Arweave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arweave 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 Arweave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arweave has no effect on the direction of Ethereum i.e., Ethereum and Arweave go up and down completely randomly.

Pair Corralation between Ethereum and Arweave

Assuming the 90 days trading horizon Ethereum is expected to generate 0.57 times more return on investment than Arweave. However, Ethereum is 1.75 times less risky than Arweave. It trades about -0.11 of its potential returns per unit of risk. Arweave is currently generating about -0.06 per unit of risk. If you would invest  406,276  in Ethereum on March 28, 2022 and sell it today you would lose (282,087)  from holding Ethereum or give up 69.43% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ethereum  vs.  Arweave

 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 July 2022. The current disturbance may also be a sign of long term up-swing for Ethereum investors.

Ethereum Price Channel

Arweave 
Arweave Performance
0 of 100
Over the last 90 days Arweave 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 July 2022. The current disturbance may also be a sign of long term up-swing for Arweave investors.

Arweave Price Channel

Ethereum and Arweave Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Ethereum and Arweave

The main advantage of trading using opposite Ethereum and Arweave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ethereum position performs unexpectedly, Arweave 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 Arweave will offset losses from the drop in Arweave's long position.
The idea behind Ethereum and Arweave 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go