Correlation Between Bitcoin Cash and BTS
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and BTS 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 BTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and BTS, you can compare the effects of market volatilities on Bitcoin Cash and BTS 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 BTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and BTS.
Diversification Opportunities for Bitcoin Cash and BTS
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bitcoin and BTS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and BTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS 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 BTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and BTS go up and down completely randomly.
Pair Corralation between Bitcoin Cash and BTS
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 0.88 times more return on investment than BTS. However, Bitcoin Cash is 1.14 times less risky than BTS. It trades about 0.1 of its potential returns per unit of risk. BTS is currently generating about -0.07 per unit of risk. If you would invest 25,187 in Bitcoin Cash on January 20, 2024 and sell it today you would earn a total of 23,355 from holding Bitcoin Cash or generate 92.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Cash vs. BTS
Performance |
| Timeline |
| Bitcoin Cash |
| BTS |
Bitcoin Cash and BTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and BTS
The main advantage of trading using opposite Bitcoin Cash and BTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, BTS 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 BTS will offset losses from the drop in BTS'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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