Correlation Between Bitcoin Gold and Waves
Can any of the company-specific risk be diversified away by investing in both Bitcoin Gold and Waves 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 Waves into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Gold and Waves, you can compare the effects of market volatilities on Bitcoin Gold and Waves 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 Waves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Gold and Waves.
Diversification Opportunities for Bitcoin Gold and Waves
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and Waves is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and Waves in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waves 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 Waves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waves has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and Waves go up and down completely randomly.
Pair Corralation between Bitcoin Gold and Waves
Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 2.12 times more return on investment than Waves. However, Bitcoin Gold is 2.12 times more volatile than Waves. It trades about 0.13 of its potential returns per unit of risk. Waves is currently generating about -0.01 per unit of risk. If you would invest 3,396 in Bitcoin Gold on February 12, 2024 and sell it today you would earn a total of 571.00 from holding Bitcoin Gold or generate 16.81% 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. Waves
Performance |
Timeline |
Bitcoin Gold |
Waves |
Bitcoin Gold and Waves Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bitcoin Gold and Waves
The main advantage of trading using opposite Bitcoin Gold and Waves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, Waves 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 Waves will offset losses from the drop in Waves' 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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