Correlation Between Bitcoin Gold and HEDG
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and HEDG 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 HEDG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and HEDG, you can compare the effects of market volatilities on Bitcoin Gold and HEDG 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 HEDG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and HEDG.
Diversification Opportunities for Bitcoin Gold and HEDG
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bitcoin and HEDG is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and HEDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEDG 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 HEDG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEDG has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and HEDG go up and down completely randomly.
Pair Corralation between Bitcoin Gold and HEDG
Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 15.34 times less return on investment than HEDG. But when comparing it to its historical volatility, Bitcoin Gold is 5.28 times less risky than HEDG. It trades about 0.03 of its potential returns per unit of risk. HEDG is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 21.00 in HEDG on January 20, 2024 and sell it today you would lose (17.38) from holding HEDG or give up 82.76% 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. HEDG
Performance |
| Timeline |
| Bitcoin Gold |
| HEDG |
Bitcoin Gold and HEDG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Gold and HEDG
The main advantage of trading using opposite Bitcoin Gold and HEDG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, HEDG 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 HEDG will offset losses from the drop in HEDG'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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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