Correlation Between Bitcoin Cash and LAMB
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and LAMB 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 LAMB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and LAMB, you can compare the effects of market volatilities on Bitcoin Cash and LAMB 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 LAMB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and LAMB.
Diversification Opportunities for Bitcoin Cash and LAMB
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and LAMB is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and LAMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAMB 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 LAMB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAMB has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and LAMB go up and down completely randomly.
Pair Corralation between Bitcoin Cash and LAMB
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 1.39 times less return on investment than LAMB. But when comparing it to its historical volatility, Bitcoin Cash is 1.1 times less risky than LAMB. It trades about 0.25 of its potential returns per unit of risk. LAMB is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 0.42 in LAMB on December 29, 2023 and sell it today you would earn a total of 0.55 from holding LAMB or generate 132.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bitcoin Cash vs. LAMB
Performance |
Timeline |
Bitcoin Cash |
LAMB |
Bitcoin Cash and LAMB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bitcoin Cash and LAMB
The main advantage of trading using opposite Bitcoin Cash and LAMB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, LAMB 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 LAMB will offset losses from the drop in LAMB'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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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