Correlation Between Bitcoin Cash and Dogecoin
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Dogecoin 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 Dogecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Dogecoin, you can compare the effects of market volatilities on Bitcoin Cash and Dogecoin 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 Dogecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Dogecoin.
Diversification Opportunities for Bitcoin Cash and Dogecoin
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bitcoin and Dogecoin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Dogecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogecoin 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 Dogecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogecoin has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Dogecoin go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Dogecoin
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 1.16 times less return on investment than Dogecoin. But when comparing it to its historical volatility, Bitcoin Cash is 1.39 times less risky than Dogecoin. It trades about 0.09 of its potential returns per unit of risk. Dogecoin is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9.96 in Dogecoin on August 23, 2024 and sell it today you would earn a total of 29.04 from holding Dogecoin or generate 291.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Cash vs. Dogecoin
Performance |
| Timeline |
| Bitcoin Cash |
| Dogecoin |
Bitcoin Cash and Dogecoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Dogecoin
The main advantage of trading using opposite Bitcoin Cash and Dogecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Dogecoin 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 Dogecoin will offset losses from the drop in Dogecoin's long position.| Bitcoin Cash vs. Bitcoin Gold | Bitcoin Cash vs. Bitcoin SV | Bitcoin Cash vs. Staked Ether | Bitcoin Cash vs. EigenLayer |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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