This module allows you to analyze existing cross correlation between LocalBitcoins Bitcoin USD and Poloniex Bitcoin USD. You can compare the effects of market volatilities on LocalBitcoins Bitcoin and Poloniex Bitcoin 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 LocalBitcoins Bitcoin with a short position of Poloniex Bitcoin. See also your portfolio center. Please also check ongoing floating volatility patterns of LocalBitcoins Bitcoin and Poloniex Bitcoin.
Assuming 30 trading days horizon, LocalBitcoins Bitcoin USD is expected to generate 4.55 times more return on investment than Poloniex Bitcoin. However, LocalBitcoins Bitcoin is 4.55 times more volatile than Poloniex Bitcoin USD. It trades about 0.1 of its potential returns per unit of risk. Poloniex Bitcoin USD is currently generating about -0.01 per unit of risk. If you would invest 1,303,724 in LocalBitcoins Bitcoin USD on March 23, 2018 and sell it today you would earn a total of 28,277 from holding LocalBitcoins Bitcoin USD or generate 2.17% return on investment over 30 days.
Pair Corralation between LocalBitcoins Bitcoin and Poloniex Bitcoin
Overlapping area represents the amount of risk that can be diversified away by holding LocalBitcoins Bitcoin USD and Poloniex Bitcoin USD in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Poloniex Bitcoin USD and LocalBitcoins Bitcoin 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 LocalBitcoins Bitcoin USD are associated (or correlated) with Poloniex Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poloniex Bitcoin USD has no effect on the direction of LocalBitcoins Bitcoin i.e. LocalBitcoins Bitcoin and Poloniex Bitcoin go up and down completely randomly.
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