Correlation Between Bitcoin Gold and Ethereum
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and Ethereum 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 Ethereum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and Ethereum, you can compare the effects of market volatilities on Bitcoin Gold and Ethereum 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 Ethereum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and Ethereum.
Diversification Opportunities for Bitcoin Gold and Ethereum
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and Ethereum is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and Ethereum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethereum 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 Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethereum has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and Ethereum go up and down completely randomly.
Pair Corralation between Bitcoin Gold and Ethereum
Assuming the 90 days trading horizon Bitcoin Gold is expected to under-perform the Ethereum. In addition to that, Bitcoin Gold is 1.34 times more volatile than Ethereum. It trades about -0.17 of its total potential returns per unit of risk. Ethereum is currently generating about -0.14 per unit of volatility. If you would invest 349,208 in Ethereum on January 20, 2024 and sell it today you would lose (42,376) from holding Ethereum or give up 12.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Gold vs. Ethereum
Performance |
| Timeline |
| Bitcoin Gold |
| Ethereum |
Bitcoin Gold and Ethereum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Gold and Ethereum
The main advantage of trading using opposite Bitcoin Gold and Ethereum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, Ethereum 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 Ethereum will offset losses from the drop in Ethereum'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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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