Correlation Between Bitcoin Cash and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Dow Jones Industrial, you can compare the effects of market volatilities on Bitcoin Cash and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Dow Jones.
Diversification Opportunities for Bitcoin Cash and Dow Jones
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bitcoin and Dow is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Dow Jones go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Dow Jones
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 7.87 times more return on investment than Dow Jones. However, Bitcoin Cash is 7.87 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 per unit of risk. If you would invest 14,530 in Bitcoin Cash on November 9, 2024 and sell it today you would earn a total of 17,301 from holding Bitcoin Cash or generate 119.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.48% |
| Values | Daily Returns |
Bitcoin Cash vs. Dow Jones Industrial
Performance |
| Timeline |
Bitcoin Cash and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Bitcoin Cash
Pair trading matchups for Bitcoin Cash
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Bitcoin Cash and Dow Jones
The main advantage of trading using opposite Bitcoin Cash and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Bitcoin Cash vs. Bitcoin Gold | Bitcoin Cash vs. Bitcoin SV | Bitcoin Cash vs. ORN | Bitcoin Cash vs. The Graph |
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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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