Correlation Between Tezos and BCD
Can any of the company-specific risk be diversified away by investing in both Tezos and BCD 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 Tezos and BCD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tezos and BCD, you can compare the effects of market volatilities on Tezos and BCD 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 Tezos with a short position of BCD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tezos and BCD.
Diversification Opportunities for Tezos and BCD
Poor diversification
The 3 months correlation between Tezos and BCD is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tezos and BCD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCD and Tezos 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 Tezos are associated (or correlated) with BCD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCD has no effect on the direction of Tezos i.e., Tezos and BCD go up and down completely randomly.
Pair Corralation between Tezos and BCD
Assuming the 90 days trading horizon Tezos is expected to under-perform the BCD. But the crypto coin apears to be less risky and, when comparing its historical volatility, Tezos is 1.21 times less risky than BCD. The crypto coin trades about -0.18 of its potential returns per unit of risk. The BCD is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 13.00 in BCD on January 20, 2024 and sell it today you would lose (2.00) from holding BCD or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tezos vs. BCD
Performance |
| Timeline |
| Tezos |
| BCD |
Tezos and BCD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tezos and BCD
The main advantage of trading using opposite Tezos and BCD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tezos position performs unexpectedly, BCD 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 BCD will offset losses from the drop in BCD's long position.The idea behind Tezos and BCD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |