Correlation Between Bitcoin Cash and Arweave
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Arweave 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 Cash and Arweave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Arweave, you can compare the effects of market volatilities on Bitcoin Cash and Arweave 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 Cash with a short position of Arweave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Arweave.
Diversification Opportunities for Bitcoin Cash and Arweave
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and Arweave is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Arweave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arweave and Bitcoin Cash 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 Cash are associated (or correlated) with Arweave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arweave has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Arweave go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Arweave
Assuming the 90 days trading horizon Bitcoin Cash is expected to under-perform the Arweave. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin Cash is 2.04 times less risky than Arweave. The crypto coin trades about -0.07 of its potential returns per unit of risk. The Arweave is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,749 in Arweave on November 1, 2024 and sell it today you would lose (95.00) from holding Arweave or give up 5.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bitcoin Cash vs. Arweave
Performance |
| Timeline |
| Bitcoin Cash |
| Arweave |
Bitcoin Cash and Arweave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Arweave
The main advantage of trading using opposite Bitcoin Cash and Arweave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Arweave 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 Arweave will offset losses from the drop in Arweave's long position.| Bitcoin Cash vs. Bitcoin Gold | Bitcoin Cash vs. Bitcoin SV | Bitcoin Cash vs. Staked Ether | Bitcoin Cash vs. Phala Network |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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