Correlation Between Bitcoin Cash and SXP
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and SXP 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 Bitcoin Cash and SXP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and SXP, you can compare the effects of market volatilities on Bitcoin Cash and SXP 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 Bitcoin Cash with a short position of SXP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and SXP.
Diversification Opportunities for Bitcoin Cash and SXP
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bitcoin and SXP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and SXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SXP and Bitcoin Cash 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 Bitcoin Cash are associated (or correlated) with SXP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SXP has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and SXP go up and down completely randomly.
Pair Corralation between Bitcoin Cash and SXP
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 0.85 times more return on investment than SXP. However, Bitcoin Cash is 1.18 times less risky than SXP. It trades about 0.08 of its potential returns per unit of risk. SXP is currently generating about 0.03 per unit of risk. If you would invest 10,409 in Bitcoin Cash on January 25, 2024 and sell it today you would earn a total of 40,079 from holding Bitcoin Cash or generate 385.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Bitcoin Cash vs. SXP
Performance |
| Timeline |
| Bitcoin Cash |
| SXP |
Bitcoin Cash and SXP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and SXP
The main advantage of trading using opposite Bitcoin Cash and SXP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, SXP 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 SXP will offset losses from the drop in SXP's long position.| Bitcoin Cash vs. Bitcoin | Bitcoin Cash vs. Dogecoin | Bitcoin Cash vs. Litecoin | Bitcoin Cash vs. Ethereum Classic |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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