This module allows you to analyze existing cross correlation between itBit Bitcoin USD and Bitfinex Bitcoin USD. You can compare the effects of market volatilities on itBit Bitcoin and Bitfinex 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 itBit Bitcoin with a short position of Bitfinex Bitcoin. See also your portfolio center. Please also check ongoing floating volatility patterns of itBit Bitcoin and Bitfinex Bitcoin.
Assuming 30 trading days horizon, itBit Bitcoin USD is expected to under-perform the Bitfinex Bitcoin. In addition to that, itBit Bitcoin is 1.29 times more volatile than Bitfinex Bitcoin USD. It trades about -0.34 of its total potential returns per unit of risk. Bitfinex Bitcoin USD is currently generating about -0.36 per unit of volatility. If you would invest 657,990 in Bitfinex Bitcoin USD on October 20, 2018 and sell it today you would lose (153,480) from holding Bitfinex Bitcoin USD or give up 23.33% of portfolio value over 30 days.
Pair Corralation between itBit Bitcoin and Bitfinex Bitcoin
Overlapping area represents the amount of risk that can be diversified away by holding itBit Bitcoin USD and Bitfinex Bitcoin USD in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Bitfinex Bitcoin USD and itBit 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 itBit Bitcoin USD are associated (or correlated) with Bitfinex Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitfinex Bitcoin USD has no effect on the direction of itBit Bitcoin i.e. itBit Bitcoin and Bitfinex Bitcoin go up and down completely randomly.
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