This module allows you to analyze existing cross correlation between Bitfinex Bitcoin USD and Bitstamp Bitcoin USD. You can compare the effects of market volatilities on Bitfinex Bitcoin and Bitstamp 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 Bitfinex Bitcoin with a short position of Bitstamp Bitcoin. See also your portfolio center. Please also check ongoing floating volatility patterns of Bitfinex Bitcoin and Bitstamp Bitcoin.
Assuming 30 trading days horizon, Bitfinex Bitcoin USD is expected to generate 0.99 times more return on investment than Bitstamp Bitcoin. However, Bitfinex Bitcoin USD is 1.01 times less risky than Bitstamp Bitcoin. It trades about -0.1 of its potential returns per unit of risk. Bitstamp Bitcoin USD is currently generating about -0.1 per unit of risk. If you would invest 1,169,900 in Bitfinex Bitcoin USD on March 21, 2018 and sell it today you would lose (343,200) from holding Bitfinex Bitcoin USD or give up 29.34% of portfolio value over 30 days.
Pair Corralation between Bitfinex Bitcoin and Bitstamp Bitcoin
Overlapping area represents the amount of risk that can be diversified away by holding Bitfinex Bitcoin USD and Bitstamp Bitcoin USD in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Bitstamp Bitcoin USD and Bitfinex 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 Bitfinex Bitcoin USD are associated (or correlated) with Bitstamp Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitstamp Bitcoin USD has no effect on the direction of Bitfinex Bitcoin i.e. Bitfinex Bitcoin and Bitstamp Bitcoin go up and down completely randomly.
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