Correlation Between Bitcoin Gold and BTS
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold 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 Gold and BTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and BTS, you can compare the effects of market volatilities on Bitcoin Gold 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 Gold with a short position of BTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and BTS.
Diversification Opportunities for Bitcoin Gold and BTS
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bitcoin and BTS is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and BTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS and Bitcoin Gold 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 Gold 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 Gold i.e., Bitcoin Gold and BTS go up and down completely randomly.
Pair Corralation between Bitcoin Gold and BTS
Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 0.55 times more return on investment than BTS. However, Bitcoin Gold is 1.81 times less risky than BTS. It trades about -0.18 of its potential returns per unit of risk. BTS is currently generating about -0.1 per unit of risk. If you would invest 4,017 in Bitcoin Gold on January 19, 2024 and sell it today you would lose (818.00) from holding Bitcoin Gold or give up 20.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Gold vs. BTS
Performance |
| Timeline |
| Bitcoin Gold |
| BTS |
Bitcoin Gold and BTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Gold and BTS
The main advantage of trading using opposite Bitcoin Gold and BTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold 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 Gold vs. Bitcoin | Bitcoin Gold vs. Dogecoin | Bitcoin Gold vs. Bitcoin Cash | Bitcoin Gold vs. Litecoin |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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