Correlation Between Bitcoin Gold and KMD
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and KMD 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 KMD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and KMD, you can compare the effects of market volatilities on Bitcoin Gold and KMD 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 KMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and KMD.
Diversification Opportunities for Bitcoin Gold and KMD
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and KMD is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and KMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMD 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 KMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMD has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and KMD go up and down completely randomly.
Pair Corralation between Bitcoin Gold and KMD
Assuming the 90 days trading horizon Bitcoin Gold is expected to under-perform the KMD. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin Gold is 2.34 times less risky than KMD. The crypto coin trades about -0.17 of its potential returns per unit of risk. The KMD is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 34.00 in KMD on January 20, 2024 and sell it today you would earn a total of 5.00 from holding KMD or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Gold vs. KMD
Performance |
| Timeline |
| Bitcoin Gold |
| KMD |
Bitcoin Gold and KMD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Gold and KMD
The main advantage of trading using opposite Bitcoin Gold and KMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, KMD 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 KMD will offset losses from the drop in KMD'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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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