Correlation Between BITM and MET
Can any of the company-specific risk be diversified away by investing in both BITM and MET 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 BITM and MET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BITM and MET, you can compare the effects of market volatilities on BITM and MET 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 BITM with a short position of MET. Check out your portfolio center. Please also check ongoing floating volatility patterns of BITM and MET.
Diversification Opportunities for BITM and MET
Pay attention - limited upside
The 3 months correlation between BITM and MET is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding BITM and MET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MET and BITM 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 BITM are associated (or correlated) with MET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MET has no effect on the direction of BITM i.e., BITM and MET go up and down completely randomly.
Pair Corralation between BITM and MET
If you would invest 86.00 in MET on January 19, 2024 and sell it today you would earn a total of 62.00 from holding MET or generate 72.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 0.78% |
Values | Daily Returns |
BITM vs. MET
Performance |
Timeline |
BITM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MET |
BITM and MET Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BITM and MET
The main advantage of trading using opposite BITM and MET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BITM position performs unexpectedly, MET 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 MET will offset losses from the drop in MET's long position.The idea behind BITM and MET 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.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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