Correlation Between Applied Blockchain and Bit Digital
Can any of the company-specific risk be diversified away by investing in both Applied Blockchain and Bit Digital 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 Applied Blockchain and Bit Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Blockchain and Bit Digital, you can compare the effects of market volatilities on Applied Blockchain and Bit Digital 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 Applied Blockchain with a short position of Bit Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and Bit Digital.
Diversification Opportunities for Applied Blockchain and Bit Digital
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Bit is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Bit Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bit Digital and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Bit Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bit Digital has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Bit Digital go up and down completely randomly.
Pair Corralation between Applied Blockchain and Bit Digital
Given the investment horizon of 90 days Applied Blockchain is expected to generate 1.74 times more return on investment than Bit Digital. However, Applied Blockchain is 1.74 times more volatile than Bit Digital. It trades about 0.16 of its potential returns per unit of risk. Bit Digital is currently generating about 0.09 per unit of risk. If you would invest 441.00 in Applied Blockchain on August 28, 2024 and sell it today you would earn a total of 609.00 from holding Applied Blockchain or generate 138.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Blockchain vs. Bit Digital
Performance |
| Timeline |
| Applied Blockchain |
| Bit Digital |
Applied Blockchain and Bit Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Blockchain and Bit Digital
The main advantage of trading using opposite Applied Blockchain and Bit Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Blockchain position performs unexpectedly, Bit Digital 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 Bit Digital will offset losses from the drop in Bit Digital's long position.| Applied Blockchain vs. Magic Empire Global | Applied Blockchain vs. Zhong Yang Financial | Applied Blockchain vs. Netcapital | Applied Blockchain vs. Lazard |
| Bit Digital vs. Scully Royalty | Bit Digital vs. Donnelley Financial Solutions | Bit Digital vs. Heritage Global | Bit Digital vs. Oppenheimer Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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