Correlation Between Basic Attention and BTS
Can any of the company-specific risk be diversified away by investing in both Basic Attention and BTS 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 Basic Attention and BTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Attention Token and BTS, you can compare the effects of market volatilities on Basic Attention and BTS 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 Basic Attention with a short position of BTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Attention and BTS.
Diversification Opportunities for Basic Attention and BTS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Basic and BTS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Basic Attention Token and BTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS and Basic Attention 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 Basic Attention Token are associated (or correlated) with BTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS has no effect on the direction of Basic Attention i.e., Basic Attention and BTS go up and down completely randomly.
Pair Corralation between Basic Attention and BTS
Assuming the 90 days trading horizon Basic Attention Token is expected to under-perform the BTS. But the crypto coin apears to be less risky and, when comparing its historical volatility, Basic Attention Token is 1.44 times less risky than BTS. The crypto coin trades about -0.17 of its potential returns per unit of risk. The BTS is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 0.42 in BTS on January 23, 2024 and sell it today you would lose (0.09) from holding BTS or give up 22.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basic Attention Token vs. BTS
Performance |
| Timeline |
| Basic Attention Token |
| BTS |
Basic Attention and BTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basic Attention and BTS
The main advantage of trading using opposite Basic Attention and BTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Attention position performs unexpectedly, BTS 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 BTS will offset losses from the drop in BTS's long position.| Basic Attention vs. Solana | Basic Attention vs. XRP | Basic Attention vs. The Open Network | Basic Attention vs. Staked Ether |
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 the Transaction History module to view history of all your transactions and understand their impact on performance.
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