This module allows you to analyze existing cross correlation between Gemini Bitcoin USD and Poloniex Bitcoin USD. You can compare the effects of market volatilities on Gemini Bitcoin and Poloniex 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 Poloniex Bitcoin. See also your portfolio center. Please also check ongoing floating volatility patterns of Gemini Bitcoin and Poloniex Bitcoin.
Assuming 30 trading days horizon, Gemini Bitcoin USD is expected to generate 1.1 times more return on investment than Poloniex Bitcoin. However, Gemini Bitcoin is 1.1 times more volatile than Poloniex Bitcoin USD. It trades about -0.13 of its potential returns per unit of risk. Poloniex Bitcoin USD is currently generating about -0.16 per unit of risk. If you would invest 743,176 in Gemini Bitcoin USD on July 20, 2018 and sell it today you would lose (103,176) from holding Gemini Bitcoin USD or give up 13.88% of portfolio value over 30 days.
Pair Corralation between Gemini Bitcoin and Poloniex Bitcoin
Overlapping area represents the amount of risk that can be diversified away by holding Gemini Bitcoin USD and Poloniex Bitcoin USD in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Poloniex 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 Poloniex Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poloniex Bitcoin USD has no effect on the direction of Gemini Bitcoin i.e. Gemini Bitcoin and Poloniex Bitcoin go up and down completely randomly.
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