This module allows you to analyze existing cross correlation between Gemini Bitcoin USD and Bitstamp Bitcoin USD. You can compare the effects of market volatilities on Gemini Bitcoin and Bitstamp Bitcoin 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 Gemini Bitcoin with a short position of Bitstamp Bitcoin. See also your portfolio center. Please also check ongoing floating volatility patterns of Gemini Bitcoin and Bitstamp Bitcoin.
Assuming 30 trading days horizon, Gemini Bitcoin USD is expected to under-perform the Bitstamp Bitcoin. But the crypto apears to be less risky and, when comparing its historical volatility, Gemini Bitcoin USD is 1.08 times less risky than Bitstamp Bitcoin. The crypto trades about -0.07 of its potential returns per unit of risk. The Bitstamp Bitcoin USD is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 672,224 in Bitstamp Bitcoin USD on June 16, 2018 and sell it today you would lose (37,517) from holding Bitstamp Bitcoin USD or give up 5.58% of portfolio value over 30 days.
Pair Corralation between Gemini Bitcoin and Bitstamp Bitcoin
Overlapping area represents the amount of risk that can be diversified away by holding Gemini Bitcoin USD and Bitstamp Bitcoin USD in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Bitstamp Bitcoin USD and Gemini Bitcoin 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 Gemini Bitcoin USD are associated (or correlated) with Bitstamp Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitstamp Bitcoin USD has no effect on the direction of Gemini Bitcoin i.e. Gemini Bitcoin and Bitstamp Bitcoin go up and down completely randomly.
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