Correlation Between BTM and Basic Attention
Can any of the company-specific risk be diversified away by investing in both BTM and Basic Attention 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 BTM and Basic Attention into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTM and Basic Attention Token, you can compare the effects of market volatilities on BTM and Basic Attention 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 BTM with a short position of Basic Attention. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTM and Basic Attention.
Diversification Opportunities for BTM and Basic Attention
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BTM and Basic is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BTM and Basic Attention Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Attention Token and BTM 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 BTM are associated (or correlated) with Basic Attention. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Attention Token has no effect on the direction of BTM i.e., BTM and Basic Attention go up and down completely randomly.
Pair Corralation between BTM and Basic Attention
Assuming the 90 days trading horizon BTM is expected to generate 1.38 times more return on investment than Basic Attention. However, BTM is 1.38 times more volatile than Basic Attention Token. It trades about 0.04 of its potential returns per unit of risk. Basic Attention Token is currently generating about 0.01 per unit of risk. If you would invest 0.98 in BTM on February 8, 2024 and sell it today you would earn a total of 0.07 from holding BTM or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTM vs. Basic Attention Token
Performance |
| Timeline |
| BTM |
| Basic Attention Token |
BTM and Basic Attention Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTM and Basic Attention
The main advantage of trading using opposite BTM and Basic Attention positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTM position performs unexpectedly, Basic Attention 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 Basic Attention will offset losses from the drop in Basic Attention's long position.The idea behind BTM and Basic Attention Token pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Basic Attention vs. Solana | Basic Attention vs. XRP | Basic Attention vs. The Open Network | Basic Attention vs. Staked Ether |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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