Correlation Between Monero and Ethereum

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

Diversification Opportunities for Monero and Ethereum

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Monero and Ethereum is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Monero and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum and Monero 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 Monero 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 Monero i.e., Monero and Ethereum go up and down completely randomly.

Pair Corralation between Monero and Ethereum

Assuming the 90 days trading horizon Monero is expected to generate 1.09 times more return on investment than Ethereum. However, Monero is 1.09 times more volatile than Ethereum. It trades about -0.04 of its potential returns per unit of risk. Ethereum is currently generating about -0.05 per unit of risk. If you would invest  25,413  in Monero on May 18, 2022 and sell it today you would lose (8,846)  from holding Monero or give up 34.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Monero  vs.  Ethereum

 Performance (%) 
       Timeline  
Monero 
Monero Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Monero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Monero may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Monero Price Channel

Ethereum 
Ethereum Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ethereum are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ethereum may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Ethereum Price Channel

Monero and Ethereum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Monero and Ethereum

The main advantage of trading using opposite Monero and Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monero 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 Monero 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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